Surprising the ruling Radical Left SYRIZA-led government of Prime Minister Alexis Tsipras, one of the country’s creditors nixed release of a pending 1-billion euro ($1.18 billion) installment from a third bailout of 86 billion euros ($101.32 billion) because the government has been slow in paying vendors owed money by the state.
The tranche was delayed by the European Stability Mechanism (ESM), which, along with the European Union and European Central Bank makes up the triumvirate of creditors who supplied the rescue package in the summer of 2015.
Tsipras swore he would never seek nor accept it but did both even though it came with more crushing austerity measures he vowed to reject but implemented instead, hitting hardest the workers, pensioners and poor he said he would save.
The ESM cited the failure of the coalition government, which includes the pro-austerity, marginal, jingoistic Independent Greeks (ANEL) of Defense Minister Panos Kammenos in paying its own debts.
That accounting trick has helped Tsipras claim the economy is in a better position and recovering at the same time he’s seeking debt relief because Greece can’t repay the 326 billion euros ($384.08 billion) it has borrowed in three bailouts since 2010.
A teleconference was later called for next week to decide the next steps over the issue, given that a deadline for releasing the low-interest loan is June 15, a date repeatedly cited over the recent period, the business newspaper Naftemporiki said.
The decision surprised the Greek government as both the EU and ECB were fine with releasing the money but the newspaper Kathimerini said that Germany, which is putting up the bulk of bailout monies, also intervened to punish Greece because the state hasn’t paid 60 billion euros ($70.69 billion) in bills.
The government will have to prove the sufficient repayment of dues to suppliers and taxpayers so that a decision on the disbursement of the cash can be made via a conference call. This means another race against time for Greece, and failure will mean the 1 billion euros will be lost.
Greece has so far received 45.9 billion euros ($54.08 billion) from the third bailout and is expected to need 11.7 billion euros ($13.78 billion), leaving untouched some 27.4 billion euros ($32.28 billion), the paper said.
The leftover could be used, the report said, to refinance maturities in the short term – until 2021 to 2022 and create a cash buffer for when the bailouts expire on Aug. 20, leaving Greece to the mercy of the markets.