Efforts, compromise and total surrender to creditors brought fruits: The European Stability Mechanism approved the financial assistance for Greece on Wednesday,, the first disbursement of the first tranche arrived on Thursday and it was directly forwarded to the European Central Bank for the payment of 3.2 billion euro maturing today.
The ESM will provide up to €86 billion in financial assistance to Greece over three years. According to a statement, the ESM adopted also “a Memorandum of Understanding (MoU) with Greece specifying the policy measures that the Greek government has agreed to undertake in order to tackle the main challenges facing its economy. The Greek government committed to reforms including: restoring fiscal sustainability; safeguarding financial stability; boosting growth, competitiveness and investment; and reforming the public administration.”
Hardly had the loan money touched a Greek government bank account, a finger pressed the “forward” button and transferred several billions to the European Central Bank.
“Greece made a 3.2 billion euro ($3.56 billion) payment to the European Central Bank on a maturing government bond on Thursday, tapping cash from its first disbursement of bailout money, a senior government official said.
“The payment was made, the funds are on their way,” the official told Reuters, declining to be named.”
Loan Money Comes & Goes
The total amount of the loan first disbursement is 26 billion euro. In this 10 billion euro for banks recapitalization are included as well as 3 billion euro to be given in September and October.
– €10 billion for the recapitalization of Greek banks. These funds, in the form of ESM- bonds will be automatically created by the ESM and will be kept in a special account.
– €12.7 billion will be allocated to service the public debt. Of these €7 billion will be given for the payment of the bridge-loan of the ESM, €3,4 billion will be given to repay bonds and interest in possession of the ECB that expire today, €2.2 billion will be forwarded to the International Monetary Fund for the payment of installment and interest, while another €100 million will serve payments of other debts.
– €1 billion will be allocated to the commencement of repayment of overdue liabilities of the public administration and repos (there are contracts totaling €9.7 billion, while €3.5 billion should be gradually returned to bodies of the general government).
€2.3 billion will be allocated to finance the primary deficit of the general government. €500 million of this amount will be directed to co-financed programs of the National Strategic Reference Framework (NSRF), that is European Structural Funds program (ESPA). (via in.gr)
I thought, European Commissioner President Jean-Claude Juncker had announced that his generous “Juncker- investment package” of 35 billion euro, will be solely financed by the EU.
“Early release of the last 5% of remaining EU payments normally retained until the closure of the programmes and applying a 100% co-financing rate for the 2007-2013 period. This would translate into immediate additional liquidity of some €500 million and a saving for the Greek budget of around €2 billion.”
Why the €500 million EU Structural Funds will be given to Greece as a “loan” is a question that Juncker still needs to answer.
PS Now I will sit back and watch the growth turning sustainable, financial stability and economic recovery arriving to Greece. Oh and competitive jobs creation. Somehow I will need to pay back the loan (loans) and interest and I wouldn’t know how. Probably with another loan generously given by Greece’ creditors.
The listing above is a good insight view to those claiming that creditors’ loans go to the people.
Hurrah!!! We did not default to ECB!