Eurozone finance ministry officials agreed on Wednesday that Greece has no legal claim to EUR1.2 billion ($1.31 billion) sitting in the bloc’s bailout fund that Athens says it had originally set aside from its own cash reserves to recapitalize banks.
When Greece’s new government signed an agreement on Feb. 20 extending its bailout for four months, it agreed to return EUR10.9 billion left in the country’s bank bailout fund to the European Financial Stability Facility–the eurozone bailout fund–where it will be kept earmarked for bank recapitalization.
Greece’s bank bailout fund received EUR48.2 billion from the EFSF between 2012 and 2014 under the country’s bailout agreements so that it could replenish capital in Greek banks. While the money it received from the EFSF was in the form of bonds, Greece also used EUR1.2 billion in cash reserves from its own bailout fund to recapitalize its banks. Athens believes that money should be returned since that didn’t originate with the EFSF.
But in a conference call held earlier on Wednesday, eurozone finance ministry officials agreed that Greece had no legal claim to the much needed EUR1.2 billion.
“There was agreement that, legally, there was no overpayment from the HFSF [Hellenic Financial Stability Fund] to the EFSF,” an EFSF spokesman said, adding that eurozone finance ministry officials will consider how to move forward on this issue “in due course.”
Racing against time and dwindling reserves, Greece has been hoping for some immediate relief by getting a slice of its next EUR7.2 billion aid tranche. That could potentially come from either EUR1.9 billion in profits earned from eurozone central bank holdings of Greek government bonds or a EUR1.8 billion disbursement from the currency union’s bailout fund.
But to get these, Athens will first have to present international creditors–the European Commission, the European Central Bank and the International Monetary Fund–with a full list of proposed reforms. Once that has been signed off by eurozone finance ministers, the country’s creditors could set out which of those measures need to be implemented to get fresh funding.