Greek Cash Reserves May Only Last One Month

Greece's economic woes continue to worry its euro-zone partner nations as some government officials there have stated that the country only has enough cash to last for about one more month.


As the Greek economy struggles through its fifth year of recession, the Greek government's revenues have fallen to new lows due to losses in personal income tax payments from wage cuts and record high unemployment. At the same time, more Greek business bankruptcies have strained the collections of other taxes, and contributions to Greece's under-funded pension system have all but halted as the number of jobless workers continues to grow.

A few financial observes have said they feel Greece has only enough cash reserves to meet the government's obligations and operating needs until early August, although some government officials have said that they fear that Athens could run out of money as early as mid-July and that whenever it occurs, it could endanger Greece's standing in the euro zone. Recent indications that its euro-zone partners will cover an upcoming EUR3.1 billion bond redemption, have given Greece's debt-laden government a bit of optimism as it negotiates with its creditors on additional austerity measures it must make to secure the next parcel of aid from a promised EUR173 billion bailout. As it stands today, the fact that Greece has raised EUR1.65 billion from the sale of 26-week T-bills suggest the government might have enough cash to hold out until September, when it hopes to receive an additional EUR31 billion payout from creditors.

None of the news is particularly inspiring and just a few weeks ago, former Greek Prime Minister Lucas Papademos said the government there will run out of money altogether by the end of July at the latest. Even though inspectors from the European Commission, the International Monetary Fund and the European Central Bank are currently in the process of reviewing Greece's stumbling overhaul program, any reports on the progress made by the reforms so far are not expected until late July.

Newly-appointed Greek Finance Minister Yannis Stournaras said there is a certainty that the needs for August will be covered, at least in terms of the bonds, but also warned that ├ČOur first concern is to secure interim financing until the next batch of aid is received.├« The only mildly bright spot in the recent findings has been that Greek officials reported that the state budget deficit amounted to EUR12.3 billion versus EUR13.1 billion for the same period a year earlier. Whether Greece can hang on for one month, or for one year, the financial instability of that nation will continue to haunt its euro-zone partner countries for some time to come.

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