As Greece and creditors squabble, cash is running out

There are only two sources of cash Greece can tap: the €7.2bn remaining in its current bailout or by issuing short-term debt that is then purchased by Greek banks. But eurozone authorities are refusing to allow either until Athens implements sweeping economic reforms, which Greek authorities have been resisting. Neither side is budging.

When will Greece run out of money?

That’s the €7.2bn question, and nobody knows the precise answer since national treasuries always seem to find ways to shift cash around — and Athens has thus far been pretty good at scraping together funds from bank accounts held by independent government agencies.

But there are a few hurdles coming up that Athens must clear and there are mounting fears that the new government might not have enough to make it over them. Greece still has to find another €500m to cover a €1.7bn bill for pensions, civil service salaries and welfare fund subsidies at the end of the month. That is a lot of money in the current environment, but most believe Athens has enough to pay it.

It has scraped up an extra €2bn in the past few weeks by instructing state-controlled corporations such as the public power supplier and the Athens water company to transfer deposits from commercial banks to the central bank’s Common Fund, where they are repo-ed at higher interest rates.

What happens after that?

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Next month is when it becomes more problematic. Mr Tsipras has told his EU counterparts that his country is unlikely to make it until the end of April without help. Bailout monitors believe a combination of payments to creditors and projected deficits in April will total about €2bn. The first big debt payment is €450m owed to the International Monetary Fund on April 9. Then a €1.4bn Treasury bill must be repaid on the 14th. Officials are increasingly concerned that there is not enough cash in Greece’s coffers to make those payments. Some say they will probably be able to pay the IMF instalment but that is about it.

Why can’t Greece use bailout funds to pay those bills?

This is what Greece would like to do, but eurozone officials have made it crystal clear that the only way Athens can access remaining bailout funds is to implement most of the reforms in the existing bailout programme — which Mr Tsipras overtly campaigned to kill.

As part of an effort to unlock those funds, Mr Tsipras last week promised Ms Merkel and other EU officials that he would present a full list of reforms he would implement in the next week or so. But it remains unclear whether that list will be sufficient. Previous Athens proposals have received lukewarm receptions from bailout monitors, and eurozone officials have expressed scepticism that any new list will be up to snuff.

Ms Merkel has publicly declared that Greece must work from a list of reforms that existed before Mr Tsipras took office. That demand sparked anger in Mr Tsipras during a news conference at last week’s EU summit, since his government has been insisting that it will refuse any austerity measures signed up to by its predecessor.

Is there any other funding available?

The only other way Greece can quickly raise cash is to issue short-term debt, which is then bought by Greek banks — which are currently the only buyer of such treasury bills. But the European Central Bank has prevented this by imposing a cap on the amount of T-bills Greek banks can buy.

The ECB can impose such a limit because Greek banks are currently relying on emergency funding from the Eurosystem to run their day-to-day operations, and it is against EU law to use central bank money to fund a national government.

A frustrated Mr Tsipras has argued that a double standard is being imposed: no such limit existed when his predecessor, Antonis Samaras, faced a similar crunch in mid-2012. The ECB argues that Mr Samaras was committed to a bailout rescue aimed at turning round Greece’s finances, while Mr Tsipras has openly repudiated his rescue programme.