A few hours after the Eurogroup had given the green light for lending to Athens to begin, the Cabinet on Wednesday approved Greece?s new deal, thereby also marking the start of the countdown to general elections.
The Cabinet met to approve the loan agreement with the European Financial Stability Fund (EFSF), which will be worth 109.1 billion euros, although the total amount of loans Greece will receive is 164.4 billion euros.
Interim Prime Minister Lucas Papademos told his ministers that the coalition government ?is nearing the end of its major and multifaceted effort to ensure the country?s funding over the next few years.? Papademos added that the decision by Fitch ratings agency to raise Greek bonds six notches from the previous default rating following the completion of the bond swap was the first positive result following the restructuring.
Papademos added that several draft laws have to be voted through Parliament over the next few weeks before the government will be able to complete its task. He said another nine pieces of legislation have to approved by the Cabinet and submitted to the House before elections are held.
Finance Minister Evangelos Venizelos announced after the meeting that he would be stepping down from his position immediately after the PASOK leadership vote on Sunday. Venizelos is the only candidate in the contest.
?As soon as the internal party procedures are completed at PASOK, I have the duty to lead the party into elections under the best conditions,? he said in an interview with Alpha TV. It is expected that Papademos will take over as finance minister for the remaining weeks of his government?s terms. No date has yet been set for elections but they are expected to take place at the end of April or in early May.
Greece is expected to receive almost 77 billion euros over the next few months from the eurozone and the International Monetary Fund. This includes 30 billion euros toward the issue of EFSF-backed bonds that will go to bondholders who took part in the debt swap.
Another 5.7 billion euros will be used to pay off interest on bonds included in the swap, while 25 billion will be used to recapitalize Greek banks. Greece is due to receive another 23.8 billion euros for this purpose later this year. Another 5.9 billion euros will be used to pay bonds held by the European Central Bank.