Gov’t must set up special account for state’s debts

11 June 2016
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The government will have to create a new “dedicated account” in order to receive funds that will be channeled toward the repayment of the state’s expired debts, which have now reached 9.2 billion euros.

The country’s creditors have long been asking the Finance Ministry to ensure that part of the bailout tranches concerning the repayment of expired state debts go straight into the market and not be used for other purposes.

The solution found is similar to the special account for the national debt and provides for the creation of a dedicated account into which the European Stability Mechanism (ESM) will directly pay the part of the bailout installments that concerns expired state debts. A strict framework for monitoring this account has also been agreed.

According to a European Commission report dated June 5, which Kathimerini has seen, there are six steps required for those funds to reach the real economy. The first concerns the creation of this dedicated account by the government. Then the ESM will deposit the tranches for the repayment of state debts there. The Finance Ministry will inform the ESM about the account’s inflows and outflows every month. Also on a monthly basis, the ministry will draft a report on the course of state debt repayments. The document makes a detailed description of what should be included in the report.

The fifth step is that if after September 2016 the account has a surplus of 300 million euros for over three months, the ministry will submit a revised plan for the repayment of the state’s debts, which will have to be approved by the eurozone.

Finally, if the funds deposited by the ESM in the dedicated account have not been used for more than three months, then ESM will have the right to demand their return, or direct them to other funding needs of the program (such as the repayment of the national debt). Of course it may also leave the funds in the account if that is the decision of its directors.

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