The European Commission appeased markets and the Greek government on Tuesday, saying that all eurozone members have committed themselves to contribute to the next tranche of the loan to Greece, set for mid-September, despite the recent rise in the Italian and Spanish cost of borrowing.
The widening spreads of the two Mediterranean countries? bonds could lead to both of them borrowing at a higher cost than the rate Greece has secured from the eurozone, analysts noted.
Commission spokeswoman Chantal Hughes stressed that ?if a country faces a higher cost of funding during the period the next tranche is to be paid, there is a mechanism that ensures its compensation.?
Athens is set to receive a total of 8 billion euros next month, comprising 5.8 billion euros from bilateral loans from eurozone countries and 2.2 billion from the International Monetary Fund.
?There has not been a proposal for any country not to contribute in the payment of the next installment of assistance to Greece, including Spain and Italy,? the Commission spokeswoman noted.
Eurozone spokesman Guy Schuller said on Tuesday the installment will probably arrive on September 15, once the troika has completed its assessment – its representatives have already paid Athens a visit.
?There is no problem at all. The troika will be in Athens from mid-August and then deliver its report in early September, which is when the decision will be made [for the next disbursement],? said Schuller.
A week earlier he had made it clear that since certain national parliaments will not have time to approve the new powers bestowed on the temporary support mechanism for Greece, the next installment will be disbursed via bilateral loans.
Another issue is whether the participation of the private sector in the bond swap program will reach the level of 90 percent in time for the sixth tranche. The aim is for everything to be in place by early September.