Eurozone finance ministers approved at their meeting in Brussels on Friday the third bailout programme for Greece. “Greece is living up to its ambitious reform commitments”, he said in a statement after six hours of gruelling talks in Brussels Friday. Unable to borrow on the global markets, another bailout is all that stands between Greece and a disorderly default on its debts that could see it forced out of Europe’s joint currency.
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Greece’s partners in the euro currency are debating whether to give that country billions of dollars in new loans, now that the Greek parliament has passed a package of painful reforms and spending cuts.
All this strengthens the hand of Prime Minister Alexis Tsipras, who got the approval of a clear majority of the Greek Parliament on Friday morning for the bailout memorandum.
European Commission (EC) President Jean-Claude Juncker said that the approval of the third bailout by the Eurogroup proved that “Greece is and will irreversibly remain a member of the euro area“.
However, Greek prime minister Alexis Tsipras was faced with a widening rebellion within his leftist Syriza party.
Greece must repay about €3.2bn to the European Central Bank (ECB) on 20 August.
In an appeal to lawmakers before the vote, Tsipras defended the decision to accept a program that comes at the price of tax hikes, spending cuts and economic reforms, saying it was a choice between “staying alive or suicide”.
“In sum, an appropriate combination of extension of maturities and grace periods for principals and interests would allow to bring Greece debt back to a sustainable level in gross financing needs terms without the need for a nominal haircut as stated by the Euro Summit of 12 July”, it added.
Eurozone finance ministers are expected to approve the vital aid for Greece later today.
Jeroen Djisselbloem, who chairs the eurozone finance gatherings, said that the meeting “won’t be short”, but that “hopefully at the end of the evening we’ll have a positive outcome”.
“Now an important precondition has been met for the process to continue”, he said.
How to deal with the banks is another key issue facing the finance ministers, as is the handling of revenues from the privatisation of Greek state assets. In a document published last month, the fund said it expects government debt to be at 170% of GDP by 2022, making it “highly unsustainable”.
The Greek finance minister addressed reporters after clinching the bailout.
In all, euro zone governments will lend €26 billion in the first tranche of the bailout before reviewing Greece’s compliance with their conditions in October.
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After backing two previous bailouts, the International Monetary Fund renewed its call for the Europeans to grant Athens debt relief – a bone of contention between the Eurogroup and the Washington-based fund.
