Euro region finance ministers are set to approve a 34.4 billion-euro ($45 billion) loan disbursement to Greece after German Chancellor Angela Merkel endorsed the country’s debt-reduction efforts.
Finance chiefs are convening in Brussels on Thursday to rubber stamp the next tranche of aid after wrapping up a 14-hour negotiation on banking union at 4:30 a.m. this morning.
“I hope that the euro group will be able to decide to disburse a new tranche for Greece today,” Merkel told the German Parliament in Berlin Thursday. “Everyone who knows the situation in Greece knows it is really important that the Greek government can pay its outstanding bills and recapitalize its banks.”
The Greek government this week said it plans to pay 11.29 billion euros to buy back 31.9 billion euros of bonds to reduce its debt burden and retain the support of the EU and the International Monetary Fund. The buyback underscores a move away from the austerity-first measures European leaders have embraced since the financial crisis began in 2009.
To repurchase all the debt tendered, Greece needs approval to spend more than the 10 billion-euro loan from Europe’s bailout fund earmarked for the buyback.
“I’m confident that we will find a decision today, we will agree on a way forward,” European Union Economic and Monetary Affairs Commissioner Olli Rehn told reporters. “Today’s decision on the Greek package will remove the doubts that are hanging over Greece. It has been quite an odyssey.”
The buyback was among measures approved by finance ministers to cut the nation’s debt to 124 percent of gross domestic product in 2020 from a projected 190 percent in 2014.
While Greece has gotten pledges for 240 billion euros of aid, the funds have been blocked since June as the government tried to get its bailout program back on track after it was disrupted by two elections and a deepening recession.