Eurozone given bridge loan option for Greece, official says

Eurozone given bridge loan option for Greece, official says

Eurozone finance ministers meeting Friday to approve a third Greek bailout will also have on the table a bridging loan option to allow Athens to meet a debt repayment if there is no accord, the European Commission said.

Greece must pay the European Central Bank some 3.4 billion euros on August 20 and is hoping the agreement on a new bailout will provide the funds.

Commission spokeswoman Annika Breidthardt said the third program – worth 85 billion euros ($94 billion) over three years in return for sweeping austerity and reform measures – had been presented to the Eurogroup chaired by Jeroen Dijsselbloem of the Netherlands for Friday’s meeting.

The Economic and Financial Committee which groups all 28 EU members to help coordinate economic policy, had agreed to submit a document on a bridge loan as a contingency plan, Breidthardt told reporters.

Commission head Jean-Claude Juncker "has said previously that he wanted a (bailout) agreement, preferably by August 20," she said.

"Submitting the documents (on a bridging loan) was only as a contingency."

Asked whether this meant the bridge loan option was likely to be chosen amid misgivings in some states, notably Germany, about another Greek rescue, Breidthardt said: "It is now in the hands of the eurozone finance ministers to take a final decision."

"It is not a decision for the Commission to take," she added.

Juncker helped arrange a bridge loan to cover a July 20 Greek payment to the International Monetary Fund and has said he was ready, if necessary, to do the same for the August 20 ECB obligation.

Germany has made clear its deep misgivings over another bailout for Greece after two others costing some 240 billion euros failed to get the economy back on track. [AFP]

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