2019 budget provides for use of cash buffer to pay for bonds reaching maturity

The government plans to draw in 2019 on part of the cash buffer that creditors gave Greece upon completion of the last bailout memorandum to pay for bonds reaching maturity next year, according to the budget tabled in parliament yesterday.

The debt of the Central Government is projected to be 357.250mn euros, or 192 percent of GDP at the end of 2018, as compared to 327mn euros or 182.4 percent of GDP in 2017.

The budget notes that the increase is temporary and is due to the creation of the cash buffer.

In 2019, the debt of the Central Government is projected to be 346.2mn euros, or 179.6 percent of GDP, a 12.8 percentage point reduction as compared to 2018.

On the other hand, the debt of the Central Government between 31/12/2017 and 31/12/2018 is expected to increase by 17.586bn euros, while between 31/12/2018 and 31/12/2019 it is projected that it will decrease by 11.5mn euros.

“The increase in the debt of the General Government in 2018 is due to the creation of a cash buffer, part of which will be used in 2019,” the finance ministry noted.

The finance ministry team believes that the large cash reserves maintained by the public sector even under the most conservative assessment are sufficient to cover its mixed funding needs at least for the next two years.

The targets of bond issuing policy for 2019 and thereafter will be oriented towards:

• Bond issues with high liquidity and volume
• Maintaining a representative curve of returns on benchmark bonds
• The constant and uninterrupted presence of the Greek Public Sector in international markets

The budget indicates that the total of new bond issues is not expected to exceed the annual payments for servicing loans. The expected extra liquidity will be used in the framework of an organised programme for the management of existing obligations in the debt portfolio, along the lines of corresponding programmes in the recent past.