Euro finance chiefs agree to lend Greece up to $134b

BRUSSELS/ATHENS • Euro zone finance ministers have agreed to lend Greece up to €86 billion (S$134 billion) after Greek lawmakers accepted their stiff conditions despite a revolt by Prime Minister Alexis Tsipras' supporters.

Assuming approval by the German and other Parliaments, €13 billion should be in Athens this Thursday to pay pressing bills and a further €10 billion will be set aside at the European Stability Mechanism, earmarked to bolster Greek banks' capital.

In all, euro zone governments will lend €26 billion in the first tranche of the bailout before reviewing Greece's compliance with their conditions in October.

One remaining uncertainty, aside from Mr Tsipras' ability to deliver sweeping Budget cuts and privatisations opposed by many of his own party, is the role of the International Monetary Fund (IMF).

After backing two previous bailouts, the IMF renewed its call for the Europeans to grant Athens debt relief - a bone of contention between the Eurogroup and the Washington-based fund.

MARKED IMPROVEMENT

After the changes in the government and the crises that we had, the cooperation with, let's say, the changed Greek government is very constructive, very well organised.

DUTCH FINANCE MINISTER JEROEN DIJSSELBLOEM

IMF managing director Christine Lagarde told the Eurogroup by phone that she could not commit until the IMF board reviewed the situation in the autumn. Officials said the IMF needed more assurances and details on Greek reforms, notably to pensions, and steps to persuade it that Greece's debt burden was sustainable.

But after a deadlock since January that ravaged the already weak Greek economy and which was ended in a dramatic U-turn a month ago by the anti-austerity leftist government to avert Athens' expulsion from the euro zone, there was a cautious sense of optimism among ministers gathered in a Brussels deep in summer holiday languor.

"After six months of very difficult negotiations with lots of ups and downs, we finally have an agreement," Greek Finance Minister Euclid Tsakalotos said last Friday. His appointment by Mr Tsipras six weeks ago in place of his abrasive predecessor has been hailed by counterparts as a mark of a new Greek "realism".

"After the changes in the government and the crises that we had, the cooperation with, let's say, the changed Greek government is very constructive, very well organised," Mr Jeroen Dijsselbloem, the Dutch minister who chaired the Brussels meeting, told reporters.

Even Germany's Mr Wolfgang Schaeuble, who last month floated a Greek exit from the euro zone as Mr Tsipras hesitated to agree to terms with fellow leaders, sounded upbeat, if still wary of a new tone in Athens that caused an angry split in Mr Tsipras' party, with nearly a third of Syriza lawmakers rebelling in Parliament.

"We will have to wait and see," said Mr Schaeuble, who has become a hate figure for rigid austerity among Greeks tired of five years of soaring unemployment.

REUTERS

A version of this article appeared in the print edition of The Sunday Times on August 16, 2015, with the headline 'Euro finance chiefs agree to lend Greece up to $134b'. Print Edition | Subscribe