November 20, 2018 / 8:02 PM / 22 days ago

UPDATE 1-Greece's slow reforms may delay return of bond profits - sources

(Adds Greek deputy finance minister, para)

By Lefteris Papadimas

Athens, Nov 20 (Reuters) - Greece is at risk of missing a first tranche of ECB profit returns on Greek bond holdings due to delays in the pace of privatisations despite over-performance on its fiscal targets, sources told Reuters on Tuesday.

About 4.8 billion euros ($5.48 billion) of profits from Greek bonds held by the European Central Bank and other eurozone central banks are supposed to be channelled back to Athens by June, 2022, in semi-annual tranches, as agreed with Greece’s lenders under a post-bailout agreement.

Greece concluded its third bailout in August but agreed to continue structural reforms under scrutiny from the European Commission.

Linking the so-called ANFA and SMP profit returns to Greece’s post-bailout performance was seen as an incentive for Athens to remain committed on hard-won reforms adopted under the three bailouts worth more than 280 billion euros.

The first 600 million-euro payment from the ANFA and SMP incomes was expected in December this year.

“The (European) Commission in its enhanced surveillance report that will be published in the coming days will refer negatively to the country’s performance on reforms such as privatisations,” a source said.

“That might delay the first payment of ANFA and SMP profits by a few months,” the source said, adding that there are also delays in state arrears payments to suppliers.

A second source confirmed the possible delay in payment due to slow progress on reforms.

Athens promised to raise 2 billion euros from privatisations this year but has only managed 700 million euros so far.

However, a state minister suggested it was premature to speak of missing any payments.

George Chouliarakis, Greece’s deputy finance minister, said a decision to make a tranche payment would be taken on the basis of an assessment on how Greece had met its commitments from the end of the bailout programme until Dec. 31.

“It is evident that tomorrow’s report of the European Commission could not, by definition, lead to an approval of submitting the payment. The relevant approval must be based on the first (assessment) report which will follow Dec. 31,” he told the semi-official Athens news agency.

Mario Centeno, the chairman of euro zone’s finance ministers, said earlier on Tuesday that Greece was likely to beat its primary surplus for the third year in a row but needed to continue the reforms it promised.

Any delay in payment would not affect Greece’s fiscal position or debt repayments.

Greece will present its final budget draft for 2019 on Wednesday, projecting a primary surplus - which excludes interest payments - of more than 3.8 percent versus a lenders’ target of 3.5 percent. ($1 = 0.8763 euros) (Reporting by Lefteris Papadimas, editing by Michele Kambas and Gareth Jones)

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