Article / 26 March 2015 at 1:15 GMT

Athens has five days to deliver plan and dodge bankruptcy

Managing Partner / Spotlight Group
United Kingdom
  • The deadline is looming for Athens to present a reform plan
  • Greece wanted to tap €1.2 billion from an EU fund, but its hopes were dashed
  • ECB raised the emergency loans to the country’s banks by €1.5 bn

By Stephen Pope

It is now 34 days since the February 20 agreement under which Greece would receive additional funding in return for submitting a detailed plan of how, when and where it would continue to make strides in reforming its economy.

However, instead of knuckling down and delivering a coherent programme of reform, the leadership of the newly elected Greek government has wasted time, offered proposals that are juvenile in the extreme, insulted the region’s leading creditor nation – and despite all their fine words in February, looked to implement unilateral spending policies that are in breach of all ongoing agreements.


Syriza came to power by pledging to end austerity, but the prime minister has had to accept an extension to a hated bailout program under the threat of a banking collapse. Photo: iStock

Well just as a dutiful landlord would, the Eurozone has shouted “Time gentlemen please” by telling Greece that it has until Monday to demonstrate how it will follow through on reform commitments. This comes after the other nations of the region dismissed a plea for Greece to be rewarded with swift access to aid funds.

Last chance saloon

So once again the door is swinging on the hinges at the last chance saloon as there is still a glimmer of hope that Greece can find a way to tap the €1.2 bn that has been allocated to aid the banking system. To do so it is a requirement that the nation shows how it will press ahead with the changes that its creditors have requested.

Do not think that this is just Germany and the other hardline nations such as Austria, Finland and Netherlands being aggressive toward their impoverished southern neighbour. It is a decision that has been taken by all the other 18 members of the single currency region as well. They will not budge from this point: that Greece needs to offer a specific and credible plan if it is to get its hands on any future allocation of bailout liquidity.

Greece will not be granted faster access to bank-aid money, the European Financial Stability Facility (EFSF) said in Wednesday’s call, as the conclusion was that Greece didn’t make any overpayment when it returned money in February. On Tuesday, March 24, the newspaper Kathimerini reported that Athens was to request the EFSF to hand it back €1.2 bn out of €10.9 bn of mostly EFSF bonds its bank rescue fund returned last month. It said Athens believes the rescue fund should have returned only €9.7 bn, as the remaining amount was cash rather than EFSF bonds.

The fund returned the sum to the EFSF last month as part of a February 20 Eurogroup agreement that extended Greece's bailout by four months.

I don’t like Mondays

As a result, this coming Monday, March 30, will prove to be a serious test of whether Greece can convince its peers that it will meet their demands for an economic overhaul. As and when the documents are submitted, they will be reviewed by the country’s official creditors and then the Finance Ministry delegates in the first few days of next week, before the Easter holiday.

This is just the latest in a long line of episodes where the world will be fixated with the endless game of sticking plaster policies that has characterised the Eurozone sovereign debt crisis since 2009.

The word is that Athens is pulling 24 hour shifts to get the list ready before state reserves run dry, which is expected to happen in a few weeks without more aid. Government spokesman Gabriel Sakellaridis told Mega TV: "It will be done at the latest by Monday…”

Sakellaridis added that the package of reforms Athens will propose would not contain recessionary measures but structural changes.

This area of reform is a politically sensitive issue for the Prime Minister, Alexis Tsipras, who came to power having pledged to end austerity policies. However, he has had to take a partial hold of the reality nettle, as he has had to accept an extension to a hated bailout program under the threat of a banking collapse.

Were the creditors able to agree that the substitute reforms can deliver an impact equivalent to previously agreed measures, then Athens would qualify for more loans from the troika and so stave off the imminent threat of bankruptcy. This is critical as the Greek government could be pushed into default if it fails to repay €460 m it owes the International Monetary Fund on  April 9.

Source: Bloomberg, Deutsche Bank 

Tax revenues so far this year are more than €1 bn below target and the Greek commercial banks are running out of liquidity.

Capital flight from the bank deposits has risen to €400 m on March 18, the highest since the February 20. One has to say that the prospect of capital controls being imposed continues to rise.

This has the potential to be extremely messy if Athens does not deliver a coherent document next Monday. It would be a instance fraught with pathos if the Eurozone demands come on the date that Greece marks the anniversary of its 1821 battle for independence. It could also prove to be the day that marks the start of independence from the Eurozone.

– Edited by Robert Ryan

Stephen Pope is the founder and managing director of Spotlight Ideas. Follow Stephen or post your comment below to engage with Saxo Bank's social trading platform.

Dimitrios Tamvakas Dimitrios Tamvakas
Actually yesterday March 25th was the national celebration for Greek indepedence , not March 30th.
Stephen Pope Stephen Pope
Hi there Dimitrios,

Thank you for your comment. I was trying to suggest that as my paper was written yesterday evening that as it was yesterday that news broke about the EZ giving Greece 5 days notice it was that demand that coincided with the celebration of national day. I can see that I could have constructed my sentence a little more clearly. So my apologies for any confusion stemming from my penmanship.



The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail