Greece given €6.8bn lifeline but warned to push through controversial reforms
GREECE secured a €6.8bn lifeline from the euro zone this evening, but was told it must keep its promises on cutting public sector jobs and other reforms in order to get all the cash.
The deal, which spares Greece defaulting on debt that falls due in August, will see Athens drip fed support under close watch from its international creditors to drive through unpopular reforms.
Under the terms of the deal, euro zone finance ministers agreed to make staggered payments of aid to Greece starting with a €2.5bn instalment from euro zone countries in July, said officials close to the talks.
The agreement foresees a further payment from euro zone countries of €500m in October.
Central banks in the Eurosystem will contribute €1.5bn in July and €500m in October, the officials said. The International Monetary Fund will give €1.8bn in August.
"That's the way it will be done," said one of the officials.
After more than three years on life support from Europe, Greece's governing coalition is split over how to meet the demands of its bailout programme, putting the country centre stage and threatening to reignite the euro zone debt crisis.
But a week of talks, culminating in promises to reform the public sector, appeared to convince international lenders - the International Monetary Fund, the European Commission and the European Central Bank - that Greece is committed to rebuilding its economy.