EU 7.2bn stop-gap bridgeloan for Greece

Backed by 28 EU members

THE EU has finalised a 7.2 billion (R96.34bn) bridge loan to Greece that will help provide the debt-ravaged nation with a stop-gap until its full threeyear bailout is settled.

“This agreement backed by 28 EU member states prevents Greece from an immediate default,” Valdis Dombrovskis, the EU Commission vice-president for euro policy, said in in Brussels. The disbursement would reach Greece today, he said.

The money would allow Greece to clear its arrears with the International Monetary Fund (IMF) and the Bank of Greece and to repay the European Central Bank (ECB), according to an EU statement on “What we are witnessing is European solidarity in action,” Dombrovskis said. “Those who say Europe lacks solidarity are mistaken; but solidarity comes with responsibility.”

The European Stability Mechanism (ESM), managed by the 19 euro area nations, released a statement saying its board approved the decision to grant the main bailout “in principle”.

That step paves the way for the EU and IMF to negotiate with Greek authorities over the exact conditions the country would face in return for the loan programme agreed by national leaders last week. Once that is finalised, euro zone finance ministers and some national parliaments would again be called on to approve the accord before money could be released.

“I think there is enough time to reach agreement by the second half of August and I hope this is what we are going to do,” Dombrovskis said.

The new programme would use only a small part of the firewall’s remaining 455bn capa- city, said ESM managing director Klaus Regling.

Regling previously said the programme would require about 50bn in ESM borrowing. The bridge loan would have a maximum maturity of three months.

Some governments outside the euro area earlier expressed concern the bridge financing could have an impact on them because it was coming from the European Financial Stabilisation Mechanism, which involves all EU nations rather than just those in the single currency.

The exposure of the EU’s nine countries outside the euro “will be fully guaranteed by liquid collateral under legally binding arrangements”, according to the statement. – Bloomberg

PHOTO: BLOOMBERG Friday. Separately, the euro area’s finance ministries took the next step in approving the country’s main bailout of as much as 86bn after national parliaments gave the go-ahead. Greece needs the bridge financing to help it meet a repayment of 3.5bn...