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ESM disburses last €15bn tranche to Greece, increasing total loans to €203.77bn

The final disbursement of 15 billion euros loan tranche to Greece has been made today, European Commissioner for Monetary Affairs Pierre Moscovici announced on Monday afternoon.

Reason to celebrate? Hardly. The money is one more one more loan on the Greeks’ shoulders and increases the total loans to Greece to 203.77 billion euros.

In addition, out of the 15-billion euros, €5.5 billion of the 15 billion has been disbursed to a segregated account to be used for debt servicing, while the remaining €9.5 billion was disbursed to a dedicated account for building up a cash buffer.

“This is the last important step towards the completion of the European Stability Mechanism on August 20,” Moscovici stressed.

“Now Greece has a strong buffer to smooth its path back to financing from the markets,” he added.

In a statement issued also on Monday, the ESM said among others

“In August 2018, Greece will be leaving the programme with a sizeable cash buffer of €24.1 billion. The buffer should cover Greece’s financial needs for around 22 months following the end of the programme and it represents a significant backstop against any risks.”

the statement also noted that half of the amount the ESM disbursed to Greece is used to cover debt servicing need.

“Of the total amount of €61.9 billion disbursed by the ESM, €36.3 billion covers debt servicing needs, €8.8 billion covers other fiscal needs (including €7 billion for arrears clearance and €0.5 billion for structural fund needs) and €5.4 billion covers bank recapitalisation needs, of which €2 billion has already been repaid to the ESM. In addition, €11.4 billion is being used to build up Greece’s cash buffer. Overall, out of the €86 billion available under the ESM programme envelope, €24.1 will not be disbursed.”

The unused amount mainly derives from the substantially lower recapitalisation needs of banks compared to what was originally foreseen (€5.4 billion used out of a maximum amount of €25 billion) and from higher domestic proceeds from the cash management of the government resources through increased repurchase operations.

So far the ESM and its temporary predecessor, the EFSF, have disbursed a total of €203.77 billion to Greece. This amount is more than Greece’s estimated GDP for 2018 and makes the ESM and the EFSF by far the largest creditor of the country.

The ESM statement lists also the medium-term debt relief measures approved by the Eurogroup on 22 June 2018 as follows – nd very generalized, of course:

1. The abolition of the step-up interest rate margin related to the debt buy-back instalment of the second Greek programme as of 2018;
2. The use of 2014 Securities Markets Programme (SMP) profits from the ESM segregated account and the restoration of the transfer of ANFA and SMP income equivalent amounts to Greece (as of budget year 2017). The available income equivalent amounts will be transferred to Greece in equal amounts on a semi-annual basis in December and June, starting in 2018 until June 2022, via the ESM segregated account and will be used to reduce gross financing needs or to finance other agreed investments;
3. A further deferral of interest and amortization by 10 years and an extension of the maximum weighted average maturity (WAM) by 10 years on €96.4 billion of EFSF loans.

PS just Just 12 more days and we, Greeks, will live happily ever after 😛

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One comment

  1. As far as the PIIGS are concerned Abraham Lincoln has been proved wrong: You can fool 99.9% of the people 99.9% of the time.