No bailout money for Greece this September?


Greece got its €10.3 billion bailout agreement signed in the beginning of this year, with two planned tranches. However, Greece did not implement all the conditions under the deal. So there will be no bailout money for Greece?

5 September, AtoZForex – Earlier this year, on May 24th, Greece got another bailout deal unlocked. That time the approved sum of bailout package was accounting for €10.3 billion in two tranches. The first injection of €7.5 billion was planned for June, where the second €2.8 billion part was coming in September.

No bailout money for Greece this September?

According to the Germany's Handelsblatt newspaper, the Eurozone will decide not to release the additional bailout money, at the meeting in Bratislava this month. German media reports European Union diplomats saying that Athens had only finished two of 15 political reforms that were required from Greece in order to get the access to bailout money. Also, Greece has not been very active in privatizing state assets, according to diplomats.

As the deal signed by International Monetary Fund and the European Central bank suggests, the European Stability Mechanism should provide financial support of €18 billion to Greece by 2018 as the return for implemented reforms.

Greece needs to implement remaining reforms

Furthermore, the debt relief is about to be arranged in tranches, taking the short-term measures to expand Greek debt into consideration. The extension of the repayment period as well as on the capping the interest rates are one of the short-term measures for extending the repayment period. The agreement does not decrease the Greece’s loan sum, alternatively, the implementation of debt relief will be started in 2018, right after Germany’s elections next year.

The European Union diplomats are reported to say that Eurogroup will discuss a progress on bailout money for Greece at the Bratislava gathering. The information came just a few days after the European Stability Mechanism stated that Greece could fix short-term debt relief means “very soon” if it puts into practice the remaining reforms required for the access to bailout money. The reforms include privatizing state assets, changing the tax system structure and reducing its pensions burden.

The view from inside

A Greek public sector official, who wishes to remain anonymous, pointed out that last week IMF Chair Lagarde said that that the IMF is satisfied with the privatization delivery so far. Also, the decision to reprofile the debt is under discussion and technical details are to be decided mainly by the ESM.

Hence, the Greek public sector official believes that there will be no decision in Bratislava for the funds to be disbursed in the next months. In September the institutions will have the second evaluation of the program and funds will follow, according to the source.

See also: Haruhiko Kuroda speech highlights: Further BoJ rate cut?

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