October 27, 2016

Greece’s bailout funds released; EU’s Juncker hails Greek efforts

European Commission President Jean-Claude Juncker waves as Greek Prime Minister Alexis Tsipras (R) welcomes him at the Maximos Mansion in Athens, Greece June 21, 2016

Greece got more than €7bn in bailout funds on Tuesday after a review of the country’s progress in implementing economic reforms, the head of the eurozone’s bailout fund told reporters in Athens.

Greece needs the money to pay off growing state arrears, maturing ECB bonds and International Monetary Fund loans. Talks with its foreign creditors over Greece’s efforts to implement a reform programme have dragged on for six months.

The European Stability Mechanism “disbursed today €7.5bn to Greece,” Klaus Regling, the managing director of the fund, said after meeting Greek Finance Minister Euclid Tsakalotos in Athens.

Athens will use €5.6bn of the amount to pay debts and €1.8bn for state arrears.

The ESM, Greece’s largest creditor, will continue to loan Athens money under favourable conditions. Interest rates charged on Greek loans are at 0.8 per cent currently and the average maturity of the loans is 32 years, Regling said.

“We want to help the Greek economy for the entire period,” he said, but “we don’t know exactly, given that forecasts are very uncertain, what the needs in a few years time will be.”

Regling said that a 3.5 per cent primary surplus target, which Greece has agreed to achieve in 2018, should be respected. The International Monetary Fund has said the target is unrealistic and would prefer it being lowered to 2.0 per cent.

“I’m absolutely content,” said European Commission President Jean-Claude Juncker, who was visiting Athens when Regling met with Tsakalotos. “Greece is on the right path and I would like it to have national ownership of the programmes which are currently being implemented.”

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