EU OKs bailoput funds for Greece

Pierre Moscovici the European economics commissioner said the rescue money would “bring real oxygen to the Greek economy”Getty Images
Pierre Moscovici the European economics commissioner said the rescue money would “bring real oxygen to the Greek economy”Getty Images
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18 June, 2016

The ESM euro zone bailout fund is scheduled to agree on Friday to disburse the next tranche of loans and the money is set to be paid early next week, European Union officials said on Wednesday.

While Greece's debt is rated "junk" by credit agencies, the European Central Bank is very likely to waive its investment-grade credit rating requirement at its June 22 Governing Council meeting, provided that the next 7.5-billion-euro tranche of bailout funds is disbursed on schedule early next week, the sources, who asked not to be named, said on Thursday.

Friday's ESM decision clears the way towards full payment of the second bailout tranche worth a total of 10.3 billion euros. An additional 1.8 billion euros it is allowed to use as a means to support the real economy.

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The euro area is scheduled to disburse a further 2.8 billion euros due in this round of aid payments at a later date after Greece has fulfilled conditions linked to privatizations.

Re-elected a year ago on a pledge to fight austerity, Mr Tsipras instead brokered Greece's third bailout with its European Union creditors that required fresh tax hikes and a controversial pension overhaul. In this effort, it is supported by the International Monetary Fund (IMF) which considers the country's debt burden to be unsustainably high.

Largarde said: "We believe for us to be engaged under a programme, a debt operation would have to be assessed on the basis of a new debt sustainability analysis that would be handled on the basis of reforms conducted, the general framework, and growth assumptions that will all be adequately measured later on".


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