AFTER a meeting in Brussels that finished at 2am on May 25, the Eurozone and the International Monetary Fund (IMF) have come to an agreement over another loan to assist Greece’s struggling economy.
The payment has allegedly been split in order to comply with requests from the German government, and will now be sent to the recession-hit country in two separate instalments.
The final agreed sum of €10.3 billion is apparently a significant reduction to what the IMF originally expected to achieve. Discussions went on for 11 hours, principally because of differing opinions positions between the IMF and Germany.
The IMF demanded on Monday May 23 that Greece’s bailout programme included “upfront” and “unconditional” debt-relief, however they have had to make massive concessions due to Germany’s stance; the central-European state was adamant that no loans should even be considered before Greece completes its current €86-billion bailout programme, due to end only in 2018.
It has been speculated the Germany’s reluctance to assist its EU neighbour is due to growing fears over lost votes ahead of the October 2017 federal elections; the governing party has previously faced public backlash for financial decisions in relation to Greece. Greece’s current debt stands at €321 billion and is worth 180 per cent of their annual economic output.
The new bailout programme is the second instalment of Greece’s third bailout, and the agreed sum of €10.3 billion will be split into two tranches; €7.5 billion in June and €2.8 billion in September.
Despite appearances, several Eurozone finance ministers have conceded that they believe Greece has implemented enough changes to earn another bailout; Athens agreed on contingency measures including tax increases worth €3.6 billion and spending cuts, earlier in May.
The recent austerity measures and tax increases, agreed on by the Greek parliament on Sunday May 22, were praised by the Eurozone community.
The new bailout programme also includes short-term debt relief measures such as re-organised repayment measures, and the locking in of lower interest rates.
Furthermore, Greece is also now expected to profit from the European Central Bank by buying euro-bonds; since 2014 the Greek government has been unable to benefit from bond arrangements due to a dispute, however it is probable that transfers will be restarted in light of the new bailout programme.