Greece
seeks negotiations on ECB bond repayment
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[February 28, 2015]
ATHENS (Reuters) - Greece called
into question on Saturday a major debt repayment it must make to the
European Central Bank this summer, after acknowledging it faces problems
in meeting its obligations to international creditors.
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Finance Minister Yanis Varoufakis said Athens should negotiate with
the ECB on 6.7 billion euros ($7.5 billion) in Greek government
bonds held by the Frankfurt-based bank that mature in July and
August.
Varoufakis did not say what he hoped to achieve in any talks, but he
accused the ECB of making a mistake in buying the bonds around the
time Greece had to take an EU/IMF bailout in 2010.
"Shouldn't we negotiate this? We will fight it," he said in an
interview with Skai television. "If we had the money we would pay
... They know we don't have it."
The government of leftist Prime Minister Alexis Tsipras promised to
honor all its debt obligations when it struck a deal with the euro
zone last week that extended Greece's bailout program for four
months.
But Athens will get no more money until the European Commission, ECB
and International Monetary Fund have approved in detail its economic
plans during the four-month period.
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With tax revenue falling far short of target last month and an
economic recovery faltering, the state must repay an IMF loan of
around 1.6 billion euros in March and find 800 million in interest
payments in April. It then needs about 7.5 billion in July and
August to repay the bonds held by the ECB and make other interest
payments.
The ECB bought the bonds on the secondary market under its
Securities Markets Programme (SMP) which aimed to reduce borrowing
costs for troubled southern European governments during the euro
zone debt crisis.
However, Greece was frozen out of international debt markets, and
more than four years later is still unable to fund itself
commercially apart from limited issues of short-term treasury bills.
Varoufakis, who has staged a media blitz in recent days to sell the
euro zone deal to the Greek people, singled out former ECB President
Jean-Claude Trichet for criticism.
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"One part of the negotiations will be on what will happen to these
bonds which unfortunately and wrongly Mr Trichet bought," he said.
"I see it as a mistake - but the ECB did this with the aim of
keeping us in the markets in 2010. They failed."
Varoufakis argued that if the bonds had remained in investors'
hands, their value would have been cut by 90 percent under a
restructuring of Greece's privately held debt in 2012, reducing the
burden on the state.
The ECB bought the bonds at a deep discount and made large profits
because their value rose as the euro zone debt crisis eased. Under
Greece's second bailout deal, these profits were due to be returned
to Athens to help it repay debt.
Athens received a partial payment in 2013 but euro zone countries
are withholding a further 1.9 billion euros pending the review of
Greece's economic plans. Varoufakis wants this money sent directly
to the IMF to meet the March payment.
(Reporting by Costas Pitas and Lefteris Papadimas; Writing by David
Stamp; Editing by Hugh Lawson)
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