Eurozone officials announced Tuesday they have approved 2.8 billion euros for Greece from its huge third bailout after the cash-strapped nation delivered the needed reforms.
Following the latest disbursement approved by the European Stability Mechanism (ESM), Greece will have received 31.7 billion euros of the 86-billion-euro bailout granted in July 2015. This is its third since being engulfed by debt in 2010.
“Today’s decision to disburse 2.8 billion euros ($3.0 billion) to Greece is a sign that the Greek people are steadily making progress in reforming their country,” the ESM’s managing director Klaus Regling said in a statement.
An ESM spokesman told AFP the funds would likely be disbursed Wednesday.
The left-wing government of Greek Prime Minister Alexis Tsipras has reached milestones in pension reform, bank governance, as well as the energy sector. It has also performed very well in revenue collection, according to the director of the ESM, the Eurozone body controlling Greece’s bailout loans.
The government won office in January 2015 initially opposed to creditor demands.
“It has also taken further steps in making the new privatisation and investment fund operational,” Regling said of the government which won office in January 2015 initially opposed to creditor demands.
If Greece implements more of the reforms under the bailout programme, its economy could “accelerate next year. Then the government may be able to start issuing bonds again next year,” Regling said.
Athens has not issued bonds since 2014, the only time that has happened since the start of the crisis in 2010.
Two weeks ago Eurozone finance ministers unlocked 1.1 billion euros for Greece. They, however, held back the other 1.7 billion over Athens’s mountain of unpaid bills over doubts from Germany.
The eurozone had demanded more data before approving disbursement. The 1.1 billion euros is to be used for debt servicing. The 1.7 billion euros will, however, go to a dedicated account for clearing arrears, the Luxembourg-based ESM said.
Athens has also lived up to pledges to clear arrears, which will boost the economy, Regling said.
“I hope our good cooperation with the Greek government continues. This would ensure the second review of the programme is completed in a timely manner,” he added.
Athens is eager to win the latest bailout cash and complete a second review by the end of the year. This would then trigger talks on reducing the country’s huge debt load.
Germany, Europe’s economic powerhouse and paymaster which holds elections next year, is loath to forgive any of Greece’s debt. Tackling the problem is, however, a firm demand of rescue partner, the International Monetary Fund.
The Washington-based IMF, a key player in Greece’s three bailouts, has said it won’t give a penny to the latest one until it sees a concrete plan from the Europeans to substantially cut Greece’s massive debt burden.
But the IMF and EU creditors disagree sharply on how much Athens can improve its finances through ongoing reforms.
On top of last year’s bailout of 86 billion euros, Greece received two earlier bailouts costing 240 billion euros.