A few details of the new Greek loan package have been published during the last few days. Based on these I ‘d like to take a look at the financing sources of the package.

The European Commission paper on the loan request tries to analyze Greek financing needs and sources. It also includes a helpful table:

Greece ESM loan financing needs and sources

Based on the above gross financing needs (excluding cumulative primary surpluses and privatization proceeds) are around €90bn. It is true that the bank recapitalization package might be less than expected so one can assume actual needs at €80-90bn.

Looking into financing sources we see an expected cumulative primary surplus contribution of €6bn. This is based on a projection of 0-1% primary deficit in 2015, 0.5-1% primary surplus in 2016, 2% in 2017 and 3.5% 2018 (and onwards). Privatization proceeds are expected at €2.5bn although IMF itself estimates them at €1.5bn.

SMP/ANFA profits contribute a bit over €7.5bn. This creates a financing gap of €64-74bn which must be covered through other sources. The head of the ESM stated today that the ESM contribution will be around €50bn. This leaves €14-24bn uncovered which must be contributed by the IMF (which could theoretically contribute €16bn under the outstanding program) and private investors (?).

Given the outstanding arrears to the IMF and the latter’s thesis that Greek debt is most probably unsustainable, I am not sure that the IMF will be able to contribute the expected amount of funds. It is actually probable that board pressure by emerging economies (and the program’s negative track record) will not allow it to continue participating in the program and make it seek an early exit. Primary surplus and privatization proceeds contributions also carry high risk of being missed (especially given the fact that the IMF is already projecting €1bn lower privatization proceeds) which could create a shortfall of a few more billions.

Overall, given the stated limit of €50bn for the ESM contribution I believe that at least €16-26bn (which actually correspond to the bank recap package) are not secured even in the baseline scenario. As a result, I am not so sure that a deposit bail-in has been avoided (at least not yet and based on the available information), since it might end up being the Greek ‘contribution’ part in order to secure financing and ‘debt sustainability’.