Greece’s Euro­pean part­ners ap­prove bil­lions in new loans


Fi­nance min­is­ters of the 19-na­tion euro sin­gle cur­rency group on Fri­day ap­proved the first 26 bil­lion eu­ros (US$29 bil­lion) of a vast new bailout pack­age to help re­build Greece’s shat­tered econ­omy.

The ap­proval came af­ter Greece’s par­lia­ment passed a slew of painful re­forms and spend­ing cuts af­ter a marathon overnight ses­sion that di­vided the gov­ern­ing party, rais­ing the specter of early elec­tions.

“Of course there were dif­fer­ences but we have man­aged to solve the last is­sues,” Eurogroup chair­man Jeroen Djis­sel­bloem told re­porters in Brus­sels. “All the in­tense work of the past week has paid off.”

Ten bil­lion eu­ros will be avail­able to re­cap­i­tal­ize Greece banks, while a sec­ond slice of 16 bil­lion eu­ros will be paid in in­stall­ments, start­ing with 13 bil­lion eu­ros by Aug. 20 when Greece must make a new debt pay­ment to the Euro­pean Cen­tral Bank.

“On this ba­sis, Greece is and will ir­re­versibly re­main a mem­ber of the Euro area,” said Euro­pean Com­mis­sion Pres­i­dent Jean-Claude Juncker af­ter the deal was sealed.

The fi­nal res­cue pack­age would even­tu­ally give Greece up to 86 bil­lion eu­ros (US$93 bil­lion) in loans over three years in ex­change for harsh spend­ing cuts and tax hikes.

The deal must still be ap­proved by some na­tional par­lia­ments, in­clud­ing Ger­many, but that is largely con­sid­ered to be a for­mal- ity. Some na­tions, such as Fin­land, have al­ready given their ap­proval.

The move saves Greece from a dis­or­derly de­fault on its debts which could have come as soon as next week and helps end months of un­cer­tainty that has shaken world mar­kets, but it means more hard­ship for or­di­nary Greeks.

Greece’s most in­flu­en­tial cred­i­tor and per­haps its harsh­est critic wel­comed the agree­ment as good re­sult.”

“We must nonethe­less re­main cau­tious be­cause of course we are pro­vid­ing huge sums of money,” Ger­man Fi­nance Min­is­ter Wolf­gang Schaeu­ble said.

“If the Greeks don’t want this pro­gram, it won’t work,” he told ZDF tele­vi­sion. “But that’s why we are only pay­ing out step by step and mak­ing sure that we don’t make the risks greater than is in­evitable if we want to help Greece.”

A key stick­ing point has been whether to for­give some of Greece’s debts.

The In­ter­na­tional Mon­e­tary Fund has in­sisted that Greece must be given some form of debt re­lief be­fore it will par­tic­i­pate in any new bailout, but a num­ber of the coun­try’s euro part­ners op­pose such a move.

“It is equally crit­i­cal for medium and long-term debt sus­tain­abil­ity that Greece’s Euro­pean part­ners make con­crete com­mit­ments ... to pro­vide sig­nif­i­cant debt re­lief, well be­yond what has been con­sid­ered so far,” IMF chief Chris­tine La­garde said in a state­ment.

Keen to have the IMF on board,

“a the fi­nance min­is­ters said the eurogroup “stands ready to con­sider, if nec­es­sary, pos­si­ble ad­di­tional mea­sures” such as longer grace and re­pay­ment pe­ri­ods.

But this would only take place in Oc­to­ber, once a re­view has been made of whether Greece is fully re­spect­ing the bailout terms.

The bailout bill passed through the Greek par­lia­ment thanks to sup­port from op­po­si­tion par­ties, with 222 votes in fa­vor, 64 against, 11 ab­sten­tions and three ab­sent in the 300-mem­ber par­lia­ment.

Although ap­proved by a com­fort­able ma­jor­ity, the re­sult was a blow to Prime Min­is­ter Alexis Tsipras, who saw more than 40 of his 149 rad­i­cal left Syriza party law­mak­ers vote against him. He has come un­der in­tense crit­i­cism from party hard­lin­ers for ca­pit­u­lat­ing to the cred­i­tors’ de­mands for bud­get cuts — aus­ter­ity mea­sures he had promised to op­pose when he won elec­tions in Jan­uary. Elena Be­ca­toros and Derek Gatopoulos in Athens, and Geir Moul­son and Frank Jordans in Ber­lin con­trib­uted to this re­port.


French Fi­nance Min­is­ter Michel Sapin talk to Greek Fi­nance Min­is­ter Eu­clid Tsakalo­tos, left, dur­ing a meet­ing of eu­ro­zone fi­nance min­is­ters at the EU Coun­cil build­ing in Brus­sels on Fri­day, Aug. 14.

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