A further delay is expected in the disbursement of the bailout installment from Greece’s creditors because some of the prior actions required have yet to be fulfilled, as the Euro Working Group realized last Thursday.
Therefore, while the government is sounding triumphalist over the decisions of the June 15 Eurogroup, it has allowed the tranche payment to be delayed until the last minute before the date the July obligations are due. It may have voted for pension cuts and tax discount reductions totaling 4.5 billion euros, but it has got stuck on specific regulations that carry some special political weight.
Sources say that instead of the decision that was to be made on Thursday, July 6, the European Stability Mechanism will instead have to decide on the eagerly anticipated disbursement a week later, on July 13 or 14. Greece has to pay private bondholders 2 billion euros on July 17, another 290 million euros to the International Monetary Fund, and some 4 billion euros to the European Central Bank on July 20. The tranche will amount to 7.7 billion euros, with another 800 million due to be disbursed in the fall.
The ESM will conduct two conference calls on Wednesday: The first concerns its Board of Governors with the participation of the eurozone finance ministers, who are expected to adopt the supplementary bailout agreement, while the second is that of the Board of Directors with the participation of the Euro Working Group members, originally scheduled to authorize the disbursement of the 7.7 billion.
The payment of the tranche has been delayed because the following prior actions remain pending: the issue of a legal opinion on whether the reduction of pensions from 2019 is compatible with the Greek Constitution, a ministerial decision to determine the exact streets where stores can open every Sunday from May to October, and the adoption of a legal clause related to the liberalization of the engineering profession. The IMF insists these three actions specifically must be completed before it will propose to its board that it should participate in Greece’s new program.