ESM is satisfied with progress
Negotiations between Greece and the European Commission, the European Central Bank and the International Monetary Fund toward a third bailout loan officially got under way on Friday following the approval of the Eurogroup and the governing board of the European Stability Mechanism (ESM).
On Monday the European Financial Stability Mechanism (EFSM), whose funds come from members of the entire European Union and not just the eurozone, will release a 7.16-billion-euro bridge loan to keep the country afloat for the next few weeks.
The conference call of the eurozone finance ministers comprising the ESM board noted that all procedures due this week have been successfully completed, with the Greek Parliament passing the first batch of measures as agreed and six other national parliaments either clearing the agreement through plenary sessions of via parliamentary committees.
Commission Vice President Valdis Dombrovskis put the blame for the June breakdown in negotiations squarely on Greece and explained that this time talks will have to end within a few weeks as the bridge loan of 7.16 billion euros is only sufficient for Greece’s obligations up to August 20, before the second bond of the European Central Bank worth about 3.2 billion euros comes due.
Out of the 7.16 billion euros, 6.7 billion will go toward payments to the ECB, the IMF and the Bank of Greece, while the rest will go into a special account along with the earnings of eurozone central banks from Greek bonds, which will constitute collateral for the non-eurozone EU member-states.
Dombrovskis dodged questions as to what would happen if the talks bore no fruit by August 20, saying that “there is ample time for us to reach an agreement by the second half of August.”
He added that the Greek government has changed its behavior from the recent past, as it has now proceeded to turn reforms into law.
