Greece to get over $9 billion loan from creditors

Ivan Schwartz
June 19, 2017

Greek Prime Minister Alexis Tsipras has welcomed a decision by the country's worldwide lenders to approve the disbursement of 8.5 billion euros in bailout loans and to detail medium-term debt relief measures following talks in Luxembourg.

We have also seen progress on debt relief, although further discussions are needed on the scope and type of measures to be provided by Greece's European creditors. Arriving for the talks in Luxembourg, the Greek finance minister, Euclid Tsakalotos, summed up his feelings tersely: "Optimistic", he said. "With unity and determination we move forward [to achieve] fair growth and heal the wounds of the crisis", Tsipras said in a tweet after midnight. The IMF, which contributed financially to Greece's first two bailouts but not the third, has wanted more information about what debt relief Greece may get before it gets more involved in the current program.

Head of Eurogroup Jeroen Dijsselbloem spoke at a televised press conference after the meeting concluded and said the timing of Greece's loan payments will depend on the country's economic growth over the years.

The issue of debt relief for Greece has sharply divided its worldwide creditors, the European Union and the global Monetary Fund, for months in the latest round of talks.

Under the terms of its 2015 bailout deal, Greece's European creditors had promised to provide cash and find a way to lighten the country's long-term debt load — as long as it kept a lid on spending and deeply reformed the economy.

"It is a new phase", he said.

The euro zone has been reluctant to commit to concrete debt relief numbers now because it argues that if Greece does all that is required of it and keeps a high primary surplus - the budget before debt servicing costs - for decades, it may not need any debt relief at all.

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Member states also agreed to a possible extension of average weighted maturities and the deferral of interest payments on some Greek bailout loans by as much as 15 years.

"We're looking ahead to the meeting of euro zone finance ministers full of hope and expectation because we've implemented our commitments and we'll continue to go down this route on the European path", he wrote in Wednesday's edition of the German newspaper Die Welt.

Further breaking down the tranche that is to be disbursed as soon as national parliaments complete their procedures and the International Monetary Fund board givers the Green light, a €7.7 billion July package will cover debt servicing with €6.9 billion and the €0.8 billion for arrears clearance to be used during the first months following July's disbursement. Greece is facing debt repayment in July.

Euro zone officials who had prepared the talks have earlier discussed a loan in the range of 7.4 to 8 billion euros, but decided at a meeting on Thursday morning to recommend to finance ministers a sum of 8.5 billion, one euro zone official said.

"We can't live on 300 euros" they chanted, with some waving sticks. Such a level of clarity would allow Greek bonds to be included in the European Central Bank's (ECB) quantitative easing (QE), allowing Greece to re-enter market in more confidence.

Greece is facing billions of euros worth of debt repayments in July.

Other reports by GizPress

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