ECONOMY

As Greece waits for release of eurozone, IMF loans, media examines how bailouts have been spent

The eurozone and the International Monetary Fund are expected to release 5.8 billion euros for Greece this week but with more than 2 billion euros due to return to the country’s lenders in August, several Greek reports on Monday focused on the fact that much of the bailout Athens has received since 2010 has been used to pay off existing debt.

Greece is expecting to receive 4 billion euros from the eurozone on Monday, with the IMF’s executive board also meeting the same day to decide on the disbursement of another 1.8 billion euros.

After the Euro Working Group approved last week the transfer of 2.5 billion euros in fresh loans from the European Financial Stability Facility (EFSF) and the return of 1.5 billion euros in profits made by eurozone central banks on Greek bonds, only the approval of national authorities, such as the German Parliament, stands in the way of Greece receiving the 4 billion euros. Reports on Monday lunchtime suggested that the Bundestag’s budget committee had given the green light for the release of Greece’s tranche.

The IMF board is also due to be briefed by the head of its troika representation in Greece, Poul Thomsen. The fund is not expected to release its tranche until Wednesday.

The funds are due to be paid into a special account at the Bank of Greece but 2.26 billion euros will be earmarked by the troika for the payment of existing debt that matures on August 20.

The nominal value of bonds held by the ECB is 1.9 billion euros, while interest is 76 million euros. Eurozone central banks hold 268 million euros worth of Greek paper and another 10.7 million euros is due in interest.

The bonds were not restructured as part of last year’s PSI and have an interest rate of 4 percent.

Reports in the Greek media on Monday highlighted that about half the 209 billion euros Greece has received since the start of the bailout in May 2010 has been used to cover interest and debt maturities.

Naftemporiki newspaper reported that 60 billion euros was spent on debt maturities between 2010 and this year, while 40 billion euros went towards covering interest.

Another 48 billion euros has been used to recapitalize Greek banks. Greek bondholders who took part in the 2012 debt restructuring received 35 billion euros in sweeteners. The bond buyback that was held later in the year required another 11 billion euros. Greece needed 15 billion euros to cover various budgetary needs.