With Greece facing the possibility of further austerity measures next year and with its looming financing gap making a third bailout – and subsequent consolidation program – appear highly likely, Prime Minister Antonis Samaras traveled to Brussels Tuesday to plead for greater solidarity from its lenders.
Speaking at an event held in honor of the late Constantine Karamanlis, Samaras stressed that Greece and its people were making a big effort to live up to its commitments. He expressed his hope the Greece’s creditors would also stand by the country.
The prime minister’s visit came a few hours after a meeting of eurozone finance ministers in Luxembourg, where European Central Bank executive board member Joerg Asmussen suggested that Greece would need to make further savings or increase its revenues next year to cover a fiscal gap. Greek Finance Minister Yannis Stournaras insisted that Asmussen did not repeat this claim, made to reporters, during the Eurogroup. But sources told Kathimerini that Greece might have to find an extra 2 billion euros next year on top of about 4 billion it has already planned to save in the draft budget.
The next stumbling block is the financing gap, which Asmussen suggested could be as high as 6 billion euros. The ECB official ruled out the possibility of the bank, or other eurozone central banks, rolling over the Greek bonds they hold to cover the gap.
Greece has suggested that it could roll over 4.4 billion euros in bonds held by Greek banks. The notes, given to the banks by the Greek government in 2009 in return for preferential shares, mature next year. Exchanging them for new ones could provide the government with a breather.
However, sources told Kathimerini that the ECB would likely block this move as well. The reason is that these bonds have been recorded on banks’ books and if the government does not pay out, it will impact the ratio of a lenders’ core equity capital to its total risk-weighted assets, which is known as the Tier 1 capital ratio. Sources said that the rollover would push two Greek banks’ Tier 1 ratio under the 9 percent demanded by European banking rules. This would lead to those lenders requiring further recapitalization, which would come at the expense of the Greek state and would defeat the purpose of the initial bond swap.
This leaves Greece with limited options and the possibility of a third bailout program, which would require further measures to be adopted, looking ever more likely.