The seven billion euro proposal is waiting on a vote by the European parliament.
Advertisement
The short-term funding is crucial because if Greece misses the European Central Bank payment on Monday the Frankfurt-based lender will cut off emergency liquidity aid to Athens, effectively collapsing its banking system.
Eurozone leaders struck a deal in Brussels on Monday after an all-night negotiation to establish the preconditions for Greece being offered the package of between 82 and 86 billion euros over the next three years.
Treasury sources say that the United Kingdom would consider the use of the European Financial Stability Mechanism to provide a bridging loan of around €7bn (£5bn) to Greece to keep it afloat in the coming weeks – but only if an indemnity is provided to protect Britain’s cash.
Prime Minister David Cameron believes a solution could be found without using tax payers’ money from the UK.
The European Commission, the EU’s executive arm, also said Greece will get extra support to help it access EUR35 billion in EU development funds by 2020.
This was “in case we do not find another solution” for financing Greece until mid-August, one official said.
European Commission Vice President Valdis Dombrovskis said the three-month loan would be paid out of the fund, but it will be repaid by loans from the separate eurozone bailout fund once the negotiation for a full program has been completed.
VIENNA Austria’s finance minister Hans Joerg Schelling is convinced that an agreement on bridge financing for Greece can be reached by late afternoon on Friday, he told ORF radio on Thursday.
But decisions in the EFSM are taken by qualified majority voting, which means that if 16 countries representing 65 percent of the EU’s population support a disbursement, its opponents like Britain or the Czech Republic can be outvoted. “It is the end of the most acute phase”.
Greece on Monday agreed on a preliminary rescue deal with its fellow eurozone partners.
Credit ratings agency Moody’s says Greece’s approval of austerity measures “averts an immediate disorderly default and potential exit from the euro” but warns that “risks remain elevated” given substantial skepticism within the country on the bailout conditions.
Osborne held a series of telephone conversations with his counterparts ahead of a meeting in Brussels in Tuesday to underline Britain’s opposition to participating in a bailout, the Financial Times and other media reported.
“We have always been clear that British taxpayers’ money is not going to be used to provide finance for a euro zone Greek deal and that therefore this is a non-starter”, Cameron’s spokeswoman said.
Advertisement
According to Reuters, citing an International Monetary Fund confidential study on Greece’s updated Debt Sustainability Analysis (DSA), the dramatic deterioration in debt sustainability due to the devastation of the Greek economy and its banks in the last two weeks points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date – and what has been proposed by the ESM.
