ESM Approves Third Bailout for Greece
Stability support for Greece approved by Eurozone
The European Stability Mechanism’s (ESM) board of governors, comprising finance ministers of the Eurozone, approved Greece’s bailout program on Wednesday via conference call.
“The ESM will provide Greece with up to 86 billion euros in financial assistance over three years”, the ESM said in a statement.
“The Greek government will use these funds for debt service, banking sector recapitalisation, arrears clearance, and budget financing. In order to return its economy to a growth trajectory and make its debt burden sustainable, the Greek government has committed to a series of far-reaching economic reforms.”
This is Greece’s third bailout deal in five years.
First tranche totals €26 billion
The first tranche of the ESM program to Greece will be 26 billion euros. This includes an up-front 10 billion euros buffer (cashless, to be disbursed in ESM notes) to repair the Greek banking system as requested by the July euro area summit.
The first tranche will also include 16 billion euros to cover the repayment of the 7.2 billion euros bridge loan granted in July from the European Financial Stabilisation Mechanism (EFSM), the upcoming ECB and IMF payments, and some arrears. This part of the tranche will be released in separate payments: the first 13 billion euros immediately upon program approval (expected Thursday, August 20), with the other 3 billion euros to be disbursed no later than 30 November 2015, if Greece completes additional prior actions.
ESM factsheet with key information on Greece
Frequently Asked Questions (FAQ) about ESM/EFSF programs for Greece
Germany approves bailout package
Earlier on Wednesday, the German and the Dutch parliaments approved the bailout program for Greece.
Germany’s “yes” vote was one of the last steps to formalize the funds for Greece.
On Friday, the Eurogroup agreed to lend Greece up to 86 billion euros through a third bailout, hours after Greece’s parliament voted to accept its terms demanded by the country’s creditors, which include a series of reforms, including privatization and public spending cuts.
Votes in some of the eurozone countries΄national governments this week was the final hurdle for the transfer of funds to begin.
On Tuesday, the parliaments of Austria, Estonia and Spain voted to support the bailout.