ATHENS: As Greece’s financial health gets ever more parlous, the option of using bank-bailout funds for purposes other than bolstering the country’s lenders looms large. Here are some pointers on how it might work:
Any euro-area decision to let Greece redirect funds allocated for bank recapitalizations would require unanimous approval by the 19-nation currency bloc’s finance ministers. Of the €240 billion ($263 billion) in international aid pledges for Greece since 2010, €50 billion have been set aside exclusively for Greek lenders. The bank-rescue package has €10.9 billion of leftover funds, which are parked at the European Financial Stability Facility in Luxembourg.
The euro area might allow Greece to use 9 billion euros of unused bank-rescue funds for current expenditure as the anti-austerity government of Prime Minister Alexis Tsipras seeks to avert a default, Spain’s Cadena Ser radio reported on Tuesday, citing European officials it didn’t identify. This step would allow the existing aid program for Greece to be extended for several months beyond June, according to Ser, which said Tsipras would have to accept 70 percent of the creditors’ conditions in return.
On Monday, German Chancellor Angela Merkel met with International Monetary Fund Managing Director Christine Lagarde, European Central Bank chief Mario Draghi, French President Francois Hollande and European Commission head Jean-Claude Juncker in an attempt to hammer out an offer that Greece could consider in coming days, according to two people familiar with the plan.
