Greece staying in the euro after £61bn bail-out
EU finance ministers agree three-year package to keep troubled country in the single currency
Eurozone finance ministers last night gave their approval for an €86bn (£61bn) Greek bail-out to help rebuild the country’s economy.
The deal marks an end to more than six months of negotiations between Athens and its creditors. The debtridden country could receive €13bn by next week. The agreement means that an emergency bail-out fund supported by Britain’s taxpayers will not be used.
Greek MPs backed the deal after a marathon all-night session in which Prime Minister Alexis Tsipras saw 31 members of his own party rebel.
GREECE last night stepped back from the “abyss” as European finance ministers approved a third, three-year bailout to keep the country afloat and avoid a chaotic exit from the euro.
After months of gruelling negotiations, eurozone ministers agreed a debt bail-out worth up to €86bn (£61bn). It comes weeks after Greece came within days of crashing out of the euro as it struggled to pay its debts.
“New loans of up to €86bn will be made available over the next three years to Greece,” the European Commission said.
The decision was made after a final, six-hour meeting to agree reforms that give international creditors sweeping control over the management of the Greek economy.
Jean-Claude Juncker, the president of the European Commission, said that the past six months had been difficult.
“Together, we have looked into the abyss. But today, I am glad to say that all sides have respected their commitments. Greece is living up to its ambitious reform commitments,” he said in a statement. “The message of today’s meeting is loud and clear: on this basis, Greece is and will irreversibly remain a member of the euro area.”
The first payment to Greece could be €13bn, officials said. That means Greece will have funds available to cover a debt payment to the European Central Bank due on August 20. And it means that an emergency bail-out fund, supported by Britain’s taxpayers, will not be used. A further €10bn cash injection for the country’s beleaguered lenders is expected to follow shortly after.
The 19 eurozone finance ministers gave their approval after Greek MPs voted through the accord early yesterday following a bitter all-night debate.
Christine Lagarde, the head of the IMF, participated in the eurozone meeting via a teleconference link and was said to have judged the agreement “positively”.
However, in a blow to Athens, ministers said the issue of writing off some of Greece’s debt would not be discussed until October.
The IMF has stated it will not participate in another bail-out programme unless it receives an “explicit and concrete agreement” on debt relief.
However, Wolfgang Schaeuble, the German finance minister, and other countries are seeking a “binding” commitment from the Fund to join the rescue programme in October. He refused to rule out a second bridging loan for Greece to allow more time for talks.
A leaked Brussels memo highlighted “serious concerns” this week about the sustainability of Greece’s debt mountain. The country’s debt share is expected to balloon to 201pc of gross domestic product next year and only fall to 175pc by the end of the decade.
Finland, Germany and Slovakia have voiced fierce opposition to any nominal haircut, but have said tentatively that they are open to giving Greece more time to repay its loans. Approval of a third bail-out deal came at a high price for the Greek government, which lost its constitutional majority after just 118 of its own MPs backed the new rescue programme.
The bill passed through the Greek parliament thanks to support from op- position parties, with 222 votes in favour and 64 against. Greek media said Prime Minister Alexis Tsipras was expected to call a vote of confidence. If he lost that vote, snap elections would be likely to follow.
Mr Tsipras defended his decision to back another rescue programme. “We took the decision to remain alive instead of committing suicide,” he told parliament. Olga Gerovasili, a spokesman for the government, said any confidence vote would take place after August 20, when the ECB payment is due.