European Stability Mechanism Managing Director Klaus Regling
The disbursement of the much-anticipated bailout tranche of 8.5 billion euros has finally been approved by the European Stability Mechanism and the first payment is expected on Monday, amounting to 7.7 billion euros.
Of that amount, 6.9 billion will be used for servicing the state debt and 800 million will be set aside for the repayment of state arrears to suppliers and taxpayers.
ESM head Klaus Regling said after Friday’s tranche approval that “the government and the Greek people deserve the recognition that they have made progress toward the return to fiscal sustainability and to economic growth.”
Greece will receive another subtranche by September 1 earmarked for the repayment of debts totalling 1.2 billion euros. That might be broken down into two or more subtranches, with Greece having to cover 400 million euros of that, so that for every 2 euros the creditors give Greece toward its arrears the government will have to add 1.
“The payment is recognition of the tremendous efforts that the Greek people have continued to make to stabilize their economy. It marks the opening of a new chapter for Greece, which must be about jobs, investment and recovery for the benefit of all,” European Commissioner Pierre Moscovici stated.
Upon the disbursement of the tranche Greece will have received support amounting to 39.4 billion euros from the third bailout program that has 86 billion euros available. Greece has received 181.2 billion euros from the ESM and the European Financial Stability Facility (EFSF) since the start of the crisis.
Also on Friday the government sent a letter to the International Monetary Fund requesting its participation in the bailout program. Athens cites in the letter all the main commitments it has made to its eurozone creditors, particularly those concerning the fiscal measures for 2019 and 2020, the labor market and the streamlining of the banks’ loans portfolios.
The IMF’s board will discuss on July 27 whether to participate in the program with 2 billion euros.