Alexis Tsipras Angela Merkel Greece Germany
Alexis Tsipras and Angela Merkel.Reuters

Greece's already perilous cash crisis worsened this week after the Athens government learned that it had no legal claim on €1.2bn in disputed funds from its bank rescue programme. The Greek government thought the funds had been incorrectly transferred to the European Financial Stability Faciltiy last month amid pressure from Berlin.

Athens learned on a conference call involving eurozone finance ministers that the cash was returned correctly and would stay in the fund.

"There was agreement that, legally, there was no overpayment from the (Greek recapitalisation fund) to the EFSF," said a spokesman for the bailout fund, as quoted by the Financial Times newspaper. The funds were part of the initial €48.2bn in bonds that the eurozone pumped into a fund to recapitalise Greek banks in 2012.

Greece's liquidity crisis could see the government run out of cash next month when it is due to pay back a part of its bailout loan. Athens has said it would present a list of economic reforms to eurozone finance ministers by Monday, 30 March, in a bid to satisfy creditors that it was on the right track. Greece will only receive the next part of its financial aid package if the eurozone ministers approve its reforms.

Greek Prime Minister Alexis Tsipras met with German Chancellor Angela Merkel in Berlin on Monday in an attempt to smooth over the pair's relationship and negotiate over the Greek reform programme. Merkel is believed to have warded off any negotiations and suggested that the Greek government should work with the bailout monitors in the Greek capital.

Despite the cash setback, the Greek government is optimistic that it can reach a deal with the eurozone before it runs out of cash.

"I believe that at the beginning of next week we will have an agreement on the package of reforms the Greek government is proposing, and on the funding of the country," Economy Minister George Stathakis told Greek television on 26 March.