Tags: EU | Greek | Bailout | europe

EU Formally Approves Second Greek Bailout, EU Official Says

Wednesday, 14 Mar 2012 07:24 AM

 

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Euro-area senior officials gave formal approval to the second Greek bailout, a European official said.

Luxembourg Prime Minister Jean-Claude Juncker, who leads the group of 17 euro-area finance ministers, will issue a statement by early afternoon, the official said on condition of anonymity. The 130 billion-euro package ($170 billion) received political approval earlier this week from the euro ministers at a meeting in Brussels.

“The situation has changed for Greece,” Greek Finance Minister Evangelos Venizelos told reporters after the ministerial meeting. Greece has “fundamental obligations” and must continue to implement its austerity program, he said, adding that elections in Greece won’t interrupt the pace of budget measures.

The International Monetary Fund’s board is set to vote on its contribution to the Greek package tomorrow in Washington. IMF Managing Director Christine Lagarde has proposed a 28 billion-euro contribution to the second bailout for Greece, the IMF said on March 12.

The agreement caps months of grueling negotiations between Greece, the IMF and euro-area authorities over the successor to an initial 2010 bailout that failed to halt the debt crisis. To win the new aid package, Greece had to sign on to deep budget cuts and complete the world’s largest-ever sovereign-debt restructuring.

Rescue Fund

Greece is now in line to receive more than 100 billion euros in the next three years from the European Financial Stability Facility, the euro region’s temporary rescue fund, starting with payments of 5.9 billion euros in March, 3.3 billion euros in April and 5.3 billion euros in May, EFSF Chief Executive Officer Klaus Regling said this week.

Going forward, the EFSF expects to disburse 48 billion euros on a non-cash basis for Greece’s bank-recapitalization efforts. Venizelos said he expects his nation to receive a 25 billion-euro first tranche of bank-sector funds soon.

The rest of the funds headed for Greece will be raised from financial markets, Regling said.


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