Monday

19th Feb 2018

EU to lend Greece up to €7bn more next week

  • The new tranche would add up to the €40.2 billion already disbursed since August 2015 (Photo: Odysseas Gp)

Greece could obtain the green light for €6 billion to €7 billion of new credit at next Monday's (22 January) Eurogroup meeting.

The decision on the next bailout tranche will be taken after eurozone finance ministers assess the latest measures adopted by Greek authorities, according to an EU official.

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On Monday, the Greek parliament backed a 1,500-page package of reforms required by the country's creditors.

The package included provisions to make strikes more difficult, to create a financial crimes agency, and to launch an electronic auction scheme for foreclosed properties. It also contained measures to help new businesses and to regulate the licensing of casinos.

The reforms followed other legislative and administrative measures, covering the energy market, taxes, and non-performing loans, adopted since December in order to close the so-called 'third review' of the EU bailout programme.

But officials from the creditor institutions - the European Commission, European Central Bank, and European Stability Mechanism - were still waiting for a Greek government report on the changes ahead of the weekend.


"As of yet, we cannot say that all preconditions have been successfully completed," the EU official said.

He add that there was "a great willingness to say that nearly everything has been done", however.

"Huge steps have been undertaken and we are nearly there," he said.

The disbursement, which is to be between €6 billion and 7 billion and which could be made in February, would be used to repay arrears and to create a cash buffer for the post-bailout period.

It would add to the €40.2 billion already disbursed since mid-2015.

Greece will exit the bailout programme in August, with the fourth and final review to be concluded in June.

While relations between the Greek government and the creditors seem to have improved over the successive reviews, the question of what happens when the programme ends is still a controversial issue.

Greek prime minister Alexis Tsipras has promised a "clean" exit - one with no further monitoring by the creditors and with no new conditions attached - as well as a return to financial markets for national funding.

But the outgoing chair of the euro working group - the body that prepares eurozone decisions - recently downplayed expectations of a such a deal.

No debt relief yet

"If there should be further debt relief after the end of the programme, then it's only logical that there will be some kind of additional agreements," the working group's Thomas Wieser told Greek daily Kathimerini.

The discussion on debt relief will involve European creditors as well as the International Monetary Fund (IMF), which last year approved €1.6 billion of funding for Greece on condition that the Greek debt was to be made sustainable.

Short-term debt relief measures were decided last year, but the EU and the IMF will have to agree on medium-term and long-term measures at the end of the programme.

Informal talks were taking place between the creditors at a technical level and there was "no possibility or need for any discussion right now [of bailout exit terms] at a political level," the EU official.

"The aim is to have everything in place for a good technical and political decision-taking when the fourth review is finished," he said, adding that disbursement of the IMF money would depend on whether there was a "strong convergence" of views on the debt issue.

Greece looking at bond market return

Greece could issue 3-year bonds as early as this week, for the first time in three years, amid mixed signs from its creditors and rating agencies.

Greece to get €7.7bn loan next week

The ESM, the eurozone emergency fund, agreed on Friday to unblock a new tranche of aid as part of the bailout programme agreed upon in 2015.

Greece and creditors prepare bailout exit

Greece's creditors agreed to unblock €6.7 billion of new aid by April and to open debt-relief talks, ahead of the end of the programme in August.

Opinion

Lessons for EU from the Greek tragedy

The Greek crisis showed the euro is more robust than people thought and that profligate states can write off public debt without leaving the currency.

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