FinMin: Higher debt figures no cause for concern

The basic target is achieving a primary surplus as of this year so the Eurogroup decision of November 27, 2012 – calling for a further reduction of the state debt – be applied, it said.

In it announcement, the Finance Ministry gave further data, among which was the following:

The central administration

debt, as presented in the public debt bulletin for the second quarter of 2013, does show an upward trend, from 305.5 billion euros in December 2012 to 321.6 billion euros in June 2013.

However, the increase was neither unexpected nor cause for worry, as it is temporary and time-related, and is balanced by the acquisition of assets from the Greek state. The apparent debt increase is a result of the obligation to show the disbursement of funds from the European Financial Stability Fund (EFSF) to the Greek state in order to finance the recapitalisation of banks.

The recapitalisation, the Ministry pointed out, took place within 2013 and is occurring through the Greek state, while the ESFS funds are recorded as a debt, according to state accounting principles.

However, the debt created by the disbursement of funds is balanced by assets that now belong to the Greek state (the shares of recapitalised banks) by their foreseen sale, based on a set resale price (by the recapitalisation’s warrants mechanisms). This resale will bring to state coffers nearly 17 billion euros, the Ministry said, according to conservative estimates by the International Monetary Fund (IMF).

The great participation of the private sector – beyond any expectation – in banks’ recapitalisation allowed the further inflow of funds that would otherwise have been allocated to the process of buying Greek state shares.

Therefore, it concluded, the amount of increase shown in the statement on public debt is attributed to the recapitalisation of banks, is based on a conjunction of circumstances and is balanced by the acquisition of assets by the Greek state.

The process of the public debt, because of sacrifices by the Greek people, has been stabilised at absolute levels, the announcement said. The achievement of primary surplus and the acceleration of privatisations will help reduce public debt in the following years, as the programme of financial policy has assessed, it concluded.

“If Greece needs additional support that will be of 10 billion euros, which is a very small amount compared with the previous memorandums, and this will not be a new memorandum but a support package without new conditions, given that our targets until 2016 have been set and neither more measures can be requested nor additional targets can be set ” said Finance Minister Yannis Stournaras in an interview with Sunday newspaper “Proto Thema”.

Referring to the possibility of a new haircut of the Greek debt, he clarified that “such a possibility does not exist” adding that “a legal basis exists from November 2012 Eurogroup decision on the extension of the debt repayment period and on the reduction of the interest rate”.

Asked on Greece’s potentials to borrow from the markets, Stournaras said that “we do not have the two necessary conditions to get into the markets which are, primary surplus and GDP’s positive growth rate for two consecutive trimesters”.

“At the end of the year it will be judged whether we will finally have a primary surplus in 2012 or that it will be achieved next year” adding that “European Commission’s decisions on the new support, the extension of the repayment period and the interest reduction will be based on 2013 results”.

Stournaras estimated that a positive flow appears in last months’ revenues and that “there’s a lot left for revenues from the offshore companies. Only 41 of 10,000 offshore have been checked and we have collected 13 million euros. If 41 give 13 million euros, imagine what will happen with 10,000″ said Stournaras pointing however that the Finance Ministry is moving slowly and doesn’t have the know-how for this kind of checks and a hesitation on the tax charging exists.

Source: AMNA

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