Greece gets first funds from bailout
Print Edition
Greece received the first 13 billion euros (US$14.5 billion) from its new bailout package yesterday, allowing it to pay a debt of 3.2 billion euros to the European Central Bank and avoid a messy default.
Greece could not have afforded yesterday’s debt repayment, which was confirmed by the debt management agency, without the rescue funds from 18 other European nations that share the euro currency. Missing the payment would have raised new questions about the country’s ability to remain in the euro.
European bailout fund supervisors approved the release of the first batch of loans on Wednesday evening. Twelve billion euros are earmarked for repaying debts and the remainder for settling arrears to public sector suppliers.
The new three-year bailout package — Greece’s third bailout in little more than five years — is worth a total of 86 billion euros, and the gradual disbursement of funds depends on the Greek government implementing a series of reforms, including steep tax hikes and spending cuts.
Accepting the conditions was a major reversal of policy for Prime Minister Alexis Tsipras and the coalition government between his radical left Syriza party and the small nationalist Independent Greeks. It has cost him a major rebellion within Syriza that threatens to split the party and could lead to early polls as soon as next month.
Tsipras has been contemplating his options after a parliament vote to approve the bailout conditions led to dozens of his own party lawmakers voting against him. Among the options being discussed are for him to call a vote of confidence in his government or to call an early election outright, potentially in September.
The government has said its main priority was to secure the bailout funding and to repay the ECB loan yesterday, after which it would announce any further action.
Greek banking is still restricted under capital controls imposed in late June to stem a bank run sparked after Tsipras called a referendum on creditor proposals for reforms following a breakdown in bailout negotiations.
There are weekly limits on cash withdrawals and Greeks can only transfer up to 500 euros abroad per month. Companies have faced problems paying suppliers abroad, with all international payments requiring a laborious process of approval by a special finance ministry committee.
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