Greece Faces Cash Crunch This Friday Without “Plan A Or Plan B”: What Happens Next

Greece’s day of reckoning may be fast approaching. Athens will have to pony up more than €2 billion in debt payments this Friday to the ECB, the IMF, and (get this) Goldman Sachs, for an interest payment on a derivative and it’s not entirely clear where the money will come from. On Wednesday, the government will vote on a “plan” to boost liquidity which includes tapping public funds and diverting bank bailout money. Here’s Bloomberg:

Greece will begin debating measures to boost liquidity as the cash-starved country braces for more than 2 billion euros ($2.12 billion) in debt payments Friday…

The government’s revenue-boosting plan includes eliminating fines on those who submit overdue taxes by March 27 to encourage payment, helping cover salaries and pensions due at the end of the month. The bill also requires pension funds and public entities to invest reserves held at the Bank of Greece in government securities and repurchase agreements, and transfers 556 million euros from the country’s bank recapitalization fund to the state. A vote on the measures is scheduled for Wednesday…

The Goldman Sachs derivative, now held by the National Bank of Greece, masked the country’s growing debt when it was agreed in 2001, helping it meet European Union rules for entering the euro area. The interest payment adds to the country’s funding woes as the government misses budget targets and the ECB refuses to allow Greek banks to keep the country afloat with additional short-term debt.

Despite government claims that it can meet its obligations, outside observers aren’t so sure. German FinMin Wolfgang Schaeuble for instance, can’t find anyone who can explain it:

“None of my colleagues, or anyone in the international institutions, can tell me how this is supposed to work.”

Meanwhile, one senior fellow at the Brookings Institution suggests Athens is winging it entirely at this point:

“The impression given is that there’s no plan A or plan B. There’s nothing.”

With the situation deteriorating rapidly, the sell side is back to drawing up Grexit plans. For their part, Morgan Stanley sees a 60% chance of either a euro exit or what the bank is calling a “staycation,” which basically means that the situation is so convoluted that no one can figure it out leading to the imposition of capital controls and a painful prolonging of the inevitable. Here’s more from MS:

Full article: Greece Faces Cash Crunch This Friday Without “Plan A Or Plan B”: What Happens Next (Zero Hedge)

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