Greece gets first installment of loans
Greece has received the first installment of a three-year emergency-loan package from eurozone allies, allowing the country to repay €8.5bn euros of bonds due tomorrow and avoid default.
The EU completed the transfer of €14.5bn, with 10 euro-region countries, including Germany, contributing to the first payment, the Athens-based Finance Ministry said today in an emailed statement.
The International Monetary Fund, which is participating in the bailout, made its initial contribution of €5.5bn last week.
The loans will cover Greece’s financing needs for May and June, a Finance Ministry official said yesterday. Tomorrow’s bond redemption is the last Greece faces until €8.6bn of three-year debt matures in March 2011.
“With this money the immediate and short-term borrowing needs and requirements of Greece are covered,” today’s statement said.
Euro-area ministers and the IMF agreed on May 2 to a €110bn aid package for the debt-stricken nation.
Greece pledged to implement austerity measures of almost 14pc of gross domestic product in exchange for the rescue funds that EU officials hoped would stem declines in the euro.
The initial bailout failed to stem the slide in the euro and end the decline in bonds of other high-deficit nations such as Spain and Portugal.
EU leaders on May 9 agreed to a financial lifeline of €750bn to try to stop the contagion. The euro was little changed today at $1.2402 after reaching a four- year low of $1.2235 yesterday.
Prime Minister George Papandreou has raised taxes, cut wages and reduced government spending in a bid to tame a deficit that reached 13.6pc of GDP last year, more than four times the EU limit.
Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, said today that there are “good reasons to believe” Greece is on the right path and officials will continue to evaluate the situation.
The other euro-region countries that contributed to today’s payment are France, Italy, Spain, the Netherlands, Austria, Portugal, Luxembourg, Cyprus and Malta.