Eurogroup chief Mario Centeno confirmed the approval of the approximately one-billion-euro (973 million euros) disbursement to Greece and the activation of what the Eurogroup calls “debt relief measures”, during a press conference after the end of the Eurogroup meeting in Bucharest.
The almost one-billion-euros consists of 644 million euros return of the European Central Bank profits from the Greek bonds, while the remaining amount is due to the suspension of the interest rate increase for the second loan agreement.
According to Centeno, the decision was reached based on the institutions’ positive evaluation of Greece’s agreed commitments – including the 2019 State Budget and the completion of “important structural reforms” that included the legislation on primary residence protection and household insolvency.
“This law will be temporary and be applied until the end of 2019,” Centeno said, referring to Greek Finance Minister Euclid Tsakalotos commitments on this score, adding that the European Commission will monitor the fiscal and financial impact of the measure.
Centeno said that the approval of the disbursement is another “positive sign” for investors, especially as regards the “ownership” of the reforms, something that has already been reflected in the markets’ reaction.
#Eurogroup agreement on disbursement of almost €1bn to #Greece following positive report by @EU_Commission sends a strong signal that the country is respecting its reform commitments. Its European partners continue to support and stand by #Greece. pic.twitter.com/h7UVV4mPgD
— Pierre Moscovici (@pierremoscovici) April 5, 2019
European Stability Mechanism chief Klaus Regling said stressed that the 973 million euros is not a new loan but a “transfer” of capital, without any conditions linked only to Greece’s commitment to continue its reform efforts and to help it repay its loans.
Regling said disbursement would be made once national approval procedures were completed and “no later than early May”.
Asked about Greece’s willingness to repay an early part of its loans from the IMF, he said that ESM would “support it”, while stressing that it should first be debated with creditors to ensure that all conditions are met.
He also noted that this would contribute to the sustainability of the Greek debt as for one third of the IMF loans (3.5 billion) Greece pays a “very expensive” 5%, “much higher” rate than its borrowing costs markets.