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Greek anger over state cash grab from hospitals, schools

Published:Tuesday | April 21, 2015 | 10:55 AM
Two women exit the Bank of Greece headquarters.


Greek local authorities were on the brink of revolt yesterday against the central government's move to use cash reserves from state agencies, including hospitals and kindergartens, to help the country make ends meet.

At an emergency meeting in Athens, angry mayors called for blank refusal to comply, staging protests or taking the radical left-led government to court over its order to have spare reserves put in a central bank account.

"Not a single municipality should deposit even one euro at the Bank of Greece," said Ioannis Lolos, mayor of the northwestern town of Igoumenitsa.

Citing an "extremely urgent and unforeseen" need for cash, an emergency government decree Monday rendered funds from state entities, such as the national opera, the national art gallery and even hospitals and kindergartens, available for short-term loans to the state. That is expected to raise up to 2.5 billion euros ($2.7 billion).

The move, unprecedented in recent Greek history, is the latest sign that the country is running perilously short of cash amid an impasse in bailout talks with its international creditors.

Until it reaches an agreement with its creditors from the 19-country eurozone and the International Monetary Fund (IMF), Greece will not get a badly-needed 7.2 billion euros ($7.7 billion) in rescue funds, without which Athens will be unable to meet loan obligations this summer.

Creditors are demanding reforms that include sweeping changes to pensions and labour rules. The three-month-old government has ruled out many key demands, arguing that it was elected to end the kind of stifling budget austerity that worsened a deep recession.