At the end of a week of rising social and political tensions, a decision by eurozone finance ministers late on Saturday to release to release a fifth tranche of emergency funding to Greece gave the beleaguered government a much-needed boost.
The tranche of funding – valued at 8.7 billion euros – is to be disbursed by the middle of the month along with a 3.3-billion-euro share that the International Monetary Fund is to expected approve on Friday. A second loan package for Greece is to be finalized by mid-September, eurozone ministers decided.
Reacting to the decision taken by his eurozone counterparts during a teleconference call on Saturday night, Finance Minister Evangelos Venizelos referred to ?a development that boosts our country?s credibility on a global level.?
?What is now critically important is the timely and effective implementation of parliamentary decisions so that we can gradually emerge from the crisis for the benefit of the national economy and the Greek people,? the minister said in a written statement. He was referring to two votes in Parliament last week that approved a new raft of deeply unpopular austerity measures including tax increases, reductions to state spending and a plan to privatize 50 billion euros in state assets.
The austerity measures are being imposed amid a deepening recession with the ministry itself estimating that the economy will contract by 3.9 percent this year.
Commenting after the eurozone decision late on Saturday, German Finance Minister Wolfgang Schaeuble said that Greece must not lose momentum in pushing through crucial reforms. ?The next step must be tackled decisively – the measures passed in Athens have to be quickly implemented. The privatizations, for example, have to be started without delay,? Schaeuble said.
Eurogroup Chairman Jean-Claude Juncker warned that the planned sell-offs would oblige Greece to accept severe restrictions on its sovereignty, noting that it must privatize state assets on a scale similar to the sell-off of East German firms after the fall of communism in the early 1990s. ?The sovereignty of Greece will be massively limited,? Juncker told Germany?s Focus magazine in an interview published on Sunday, adding that teams of experts would be dispatched as advisers to the privatization process. Juncker proposed a solution ?based on a model of Germany?s Treuhand agency,? referring to the privatization agency that sold off 14,000 East German firms between 1990 and 1994.
?One cannot be allowed to insult the Greeks,? the Eurogroup chief cautioned. ?But one has to help them. They have said they are ready to accept expertise from the eurozone.?