ESM approves 2 billion euro disbursment to Greece

The European Stability Mechanism’s (ESM) Board of Directors authorized the disbursement of 2 billion euros to Greece, following the country’s completion of the first set of prior actions as demanded by creditors. In the ESM’s announcement it is mentioned that the disbursement will primarily be used for debt service, as well as for the clearance of arrears, along with co-financing projects funded by the EU structural funds.

The director of the ESM Klaus Regling said that “today’s decision of disbursing 2 billion euros from the ESM represents the Greek government’s commitment to the program and to applying a vast list of reforms. This includes reforms of the financial sector which are very important for the recapitalization of the banks. If the program implementation remains strong, then I am confident that the reform efforts of the Greek people will allow them to make visible strides towards a strong recovery”.

However, there is no mention in the ESM’s announcement about the 10 billion euros needed for the recapitalization of the banks, for which the Eurogroup is expected to rule on at a later date.

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The institutions received the Greek government’s letter with proposals and prior actions on time, stated a Eurozone official, refusing however to give an estimation on the letter’s context.

According to the same official, the  European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) are examining the Greek proposals and will complete their evaluation on Friday night.

The Euro Working Group will convene on Saturday at 11:00 am and a Eurogroup will follow at 4:00 pm.

He also reminded that the institutions will evaluate the Greek government’s request for a new financial aid from the European Stability Mechanism (ESM) taking under consideration the Eurozone’s stability, the sustainability of the Greek debt and the real financial needs of the country in the next years.

Moreover, the institutions will evaluate the Greek proposals with the list of prior actions. If a new support program to Greece is decided at Saturday’s Eurogroup then maybe there will be no need for a Euro Summit on Sunday.

Regarding the so-called “bridge-financing” that will cover Greece’s financial needs for the next month, the same official noted that in order to start this discussion, there must be an agreement for the long-term financing of the Greek economy. He also clarified that the ESM treaty does not foresee early disbursements.

(source: ana-mpa)

A.Makris – See more at:

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