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Inside Fighting: Athens Faces Local Opposition Over Council Cash Transfers

© Flickr / Sonia GolemmeStacks of Euro banknotes and coins
Stacks of Euro banknotes and coins - Sputnik International
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The cash-strapped Greek government is facing a financial fight from within its own country, after a controversial plan to transfer excess money reserves from local government bodies to Greece's central bank was met with fierce criticism from local authorities.

Earlier this week an emergency presidential decree was issued, calling for 1,500 local government bodies to send their excess cash reserves to the Bank of Greece, as the country struggles to meet planned debt and pension payments for April.

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However, mayors and district municipality officials have so far refused to cooperate with the government's requests, with Giorgis Kaminis, the mayor of Athens, saying he would fight what he believed was an "unconstitutional" confiscation law, which does not require parliamentary ratification.

"We're determined to use all political and legal means we can to repudiate the content of the decree," the Union of Municipalities and Communities said in statement on Tuesday night, following a meeting with Syriza government officials.

The opposition to the cash transfer request comes despite assertions from Greek cabinet ministers that such a practice is common within the EU, and that the transfer of funds would merely be a loan, which would be paid back at an interest rate 2.5 times higher than the rate received by commercial banks.

These efforts to boost the Greek government's coffers come amid concerns Athens may not be able to pay public sector wage bills and meet international debts, with many analysts saying the move is an indication of the dire situation of Greek finances, given that the country hasn't received fresh bailout aid.

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Greek government estimates suggest that transferring the excess cash reserves from local government bodies could generate anywhere between $1.3 billion to $2.2 billion for the central bank, and could provide some short-term relief to pay expenses before agreeing on any potential new loan from European creditors.

The fact that local administrative councils in Greece have been able to hoard and save money during austerity years has been seen by many as indicative of the corruption and lack of financial controls that led to the country's dire economic position.

Meanwhile the tension and reluctance from local authorities to transfer their cash to the national coffers has highlighted that the Syriza-led government is fighting forces both in Europe and in Greece to keep the country afloat, as it desperately looks for more cash to make essential debt and wage payments.

There is increasing pressure on Athens to meet another IMF payment in May, with a deal to unlock much needed bailout funds not expected ahead of a meeting of eurozone finance ministers on Friday.

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