Greece Moves to Seize Public-Sector Funds

The Greek government issued a decree that forces local governments to transfer cash balances to the central bank, as debt to the International Monetary Fund and month-end salary payments come due.

“Central government entities are obliged to deposit their cash reserves and transfer their term deposit funds to their accounts at the Bank of Greece,” the decree issued Monday on a government website said. The “regulation is submitted due to extremely urgent and unforeseen needs.”

The move to effectively confiscate cash reserves currently held in commercial banks and transfer them to the central bank could raise about 2 billion euros ($2.15 billion), two people familiar with the issue said. The cash can then be used to meet obligations such as the repayment of a 770 million-euro-tranche owed to the IMF on May 12, the people said.

Greece and its creditors remained at loggerheads with time running out to unlock aid and avert a default on the country’s 313 billion euros of obligations. The sides haven’t even set 2015 budget targets, let alone policies to meet them, an official representing creditors said Monday, asking not to be named as talks aren’t public.

Bloomberg

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