Parliament Report Foresees Funding Gap for 2014

The report notes that the current memorandum with the troika ends in 2014 when the last loan will be disbursed. underscoring that in the second half of 2014 the funds available by the country will not be enough to cover its obligations on interest payments. According to the report a primary surplus will not be enough to cover interest payment.

The IMF estimates this fiscal gap at around 4.4 billion euros by the end of 2014 and an additional 6.5 billion euros in 2015, for a total of 11 billion euros, while the Greek government expects a smaller gap, hoping for a primary suprlus of 2.83 billion euros in 2014.

This gap will have to be covered either through new loans, lower interest rates and new measures, or a combination of all these.

The Greek government has categorically dismissed the introduction of additional measures. The Budget Office said that if spending on overdue debt payments was added then the fiscal gap would turn into a funding gap.

Despite the difficulty for Greece to borrow on reasonable terms from capital markets to cover this funding gap, the report stresses that "an agreement on new support loans and other facilitations (lower interest rates) would be the most possible solution given current facts." Such an option is included in a November's Eurogroup council decisions.

The Budget Office estimates that "a new loan agreement to cover the country's fiscal gap will offer only a temporary solution for a period of one or two years and postpone dealing with the major problem, the country's big public debt."

The report is based on the assumption that the country's debt will not be sustainable by 2020 or 2022 exclusively through national efforts (primary surpluses, privatizations) without further restructuring (new haircut) or readjustment (extending maturity periods) and other facilitations.