Greece scrapes together pension payments

The Greek government was struggling on Thursday to complete payments to more than 2m pensioners after claiming that a "technical hitch" delayed an earlier disbursement.

Elderly Athenians waited at branches of the National Bank of Greece, the state-controlled lender handling the bulk of pension payments, which are staggered over several days.

"Normally I only withdraw half the money at the end of the month but today I'm taking it all," said Sotiria Zlatini, a 75-year-old former civil servant. "There are so many rumours gong round because of the government's problems and what happened two days ago."

On Tuesday, the main state social security fund, IKA, delayed pension payments by almost eight hours. The heavily lossmaking fund relies on a monthly subsidy from the budget to be able to cover its obligations.

"I went to the ATM in the morning before going to the supermarket but the money wasn't there . . . I went back at eight in the evening feeling quite anxious but it had arrived," said Socrates Kambitoglou, a retired civil engineer.

Dimitris Stratoulis, deputy minister for social security, said a technical problem with the interbank payment system caused the delay. Payments were made normally on Wednesday, a senior Greek banker said.

But an official with knowledge of the government's cash position denied that a technical hitch had occurred. He said the payments were held up because the state pension funds "were still missing several hundred million euros on Tuesday morning".

Another official said inflows of €500m on Wednesday had eased the situation and €300m was due to be paid on Thursday. "We're probably going to make it this month," he said.

The leftwing Syria-led government scrambled to pay pensions and public sector salaries in February and March after failing to reach agreement with international lenders on unlocking €7.2bn of bailout aid.

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Greece has relied on its own funding resources since last August due to a prolonged stand-off with creditors over structural reforms, including further cuts in pensions, increases in value added tax and fully liberalising labour markets.

The liquidity squeeze has become especially acute this month because of shrinking cash reserves and a sharp decline in tax revenues, according to a finance ministry official.

Trying to address the cash crunch the government last week ordered 1,500 state entities, including local authorities, hospitals and universities, to hand over their cash reserves to the central bank to be deposited in short-term "repos" - repurchase agreements.

But foot-dragging by some entities reluctant to lose control of their funds, among them local authorities run by mayors from opposition political parties, has meant that transfers have been delayed.

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