June 25, 2013 / 5:12 PM / 6 years ago

Greece dismisses fears of funding gap from asset sale delays

ATHENS, June 25 (Reuters) - Greece dismissed fears of a funding gap stemming from delays in its privatisation programme, saying it could dig into funds left over after the country’s four big banks are recapitalised.

Privatisations are key to Greece’s reform efforts because they help reduce debt. They are also needed to boost growth and spur job creation.

“Those who argue that the delay in privatizations will cause a funding gap for Greece disregard the fact that the financial envelope for banks seems to develop better than expected,” Finance Minister Yannis Stournaras said on Tuesday.

“That compensates for potential delays, if any, in the privatization programme,” he told an investors’ forum.

In a blow to its ambitious asset sales programme, Greece failed to attract any buyers for its natural gas company DEPA this month, and received only one bid for DESFA, the grid operating subsidiary.

This means the country is not likely to meet its binding goal of 1.8 billion euros ($2.35 billion) from asset sales by the end of September, forcing the government to seek other savings to hit its bailout targets.

Greece’s four biggest banks are being propped up by 27.5 billion euros in funds from EU/IMF lenders to plug capital holes after losses on government debt writedowns and bad loans following the financial crisis. The money will mostly come from the Hellenic Financial Stability Fund (HFSF).

The HFSF will have as much as 7 billion euros ($9.3 billion) left over after the country’s four big banks are recapitalised, the central bank governor said this month.

Prime Minister Antonis Samaras said this week that Greece’s recent government crisis and failure to meet privatisation targets will not derail its international bailout. ($1 = 0.7649 euros) (Reporting by Karolina Tagaris; Editing by Louise Heavens)

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