Greece to pay key debt with bailout

Berlin protesters depicting members of the German government on Wednesday to oppose the third bailout for Greece.
Berlin protesters depicting members of the German government on Wednesday to oppose the third bailout for Greece.PHOTO: EUROPEAN PRESSPHOTO AGENCY

ATHENS • Greece was set to receive the first instalment of its third multibillion-euro bailout yesterday, just as a key repayment to the European Central Bank falls due.

A source close to the matter said Greece would receive €23 billion (S$35.8 billion), allowing Athens to make a loan repayment of €3.4 billion due the same day to the European Central Bank (ECB).

Greece got the green light on Wednesday to start repaying its debts and reviving its economy after euro zone finance ministers formally approved the third reforms-for-rescue package of up

to €86 billion. The all-clear came after the new bailout was approved by European parliaments, including the Bundestag of Germany.

"This agreement provides perspective for the Greek economy and a basis for sustainable growth," said Mr Jeroen Dijsselbloem, the Dutch Finance Minister who chairs the so-called Eurogroup of euro zone finance ministers, vowing that officials would monitor the process closely.

Pending endorsement from key national parliaments, Mr Dijsselbloem and the other euro zone finance ministers had on Aug 14 approved the bailout to keep Greece in the single currency bloc, pay its bills and revive its shattered economy.

The German Parliament voted by an overwhelming majority on Wednesday to back the third bailout, with Chancellor Angela Merkel spared a major rebellion of deputies opposing the aid. Interrupting their holidays for the second time this summer to cast ballots on a Greek rescue, lawmakers in the Bundestag Lower House approved the rescue plan by 453 votes to 113. Eighteen abstained.

Greek Prime Minister Alexis Tsipras was on Wednesday mulling over whether to hold early elections after the austerity bailout split his radical left Syriza party, leaving him powerless to push further reform Bills through Parliament.

A decision is expected next week.

Mr Tsipras rode to power in January on a wave of popular anger against the tax hikes, spending cuts and reforms demanded by creditors in exchange for two previous bailouts costing €240 billion.

He has said that Greece's creditors - the European Union, ECB , International Monetary Fund and the European Stability Mechanism - have agreed to discuss public debt relief measures when a first assessment of reform compliance is completed in November. The Greek Premier has also called for the European Parliament to join the quartet of creditors in overseeing the recently approved bailout deal.

The debt currently stands at €312.8 billion, the Finance Ministry said on Wednesday.

Yesterday's initial €23 billion payment will see €10 billion placed in a fund to recapitalise Greek banks, while another €13 billion will be partly used to pay back the ECB and to cover an EU bridging loan of €7.16 billion, which was given last month to allow Athens to honour previous commitments to the ECB and the IMF.

The bailout accord goes far beyond economic management to include an extensive overhaul of Greece's health and social welfare systems, plus its business practices and public administration. Seemingly small details of daily life will be affected by the new rules, from visits to the doctor to an extension of the expiry dates on pasteurised milk.


A version of this article appeared in the print edition of The Straits Times on August 21, 2015, with the headline 'Greece to pay key debt with bailout'. Print Edition | Subscribe