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Eurogroup reaches deal on Greece to release funds

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Eurozone ministers have struck a deal to unlock the latest tranche of Greeces bailout cash. The bailout fund will disburse €8.5bn (£7.4bn) to Greece, eurozone ministers said in a statement.


The latest tranche of the international bailout will help avert a fresh debt crisis in July when the next €7bn euro repayment of loans becomes due. The payment is still subject to parliamentary approvals in some countries.


International Monetary Fund (IMF) director Christine Lagarde said she would propose an approval in principle to her executive board.


The IMF wants clarity on longer-term debt relief for Greece once the current funding scheme, worth up to €86bn, runs out next year.

Ms Lagarde said the IMF was ready to participate to the third bailout programme for Greece after the meeting of eurozone finance ministers in Luxembourg which capped months of negotiations.


However, the IMF could join the programme with a financial support "in the range of $2bn" only after a full deal on additional measures of debt relief for Greece, she said.


Time was beginning to press for this payment. Greece has repayments on other loans due next month, which it could not otherwise have made.


The decision by eurozone finance ministers reflects economic policy actions already taken by Greece and the new commitment by the IMFs managing director Christine Lagarde to recommend that her board contribute financially to this bailout.


An IMF contribution was politically important for Germany, especially to strengthen the perceived credibility of the bailout.

Eurogroup’s president Mr. Dijsselbloem welcomed during the press conference the ambitious policy package that was fully agreed between Greece and the institutions and the adoption of the agreed prior actions for the 2nd review. His official remarks following the Eurogroup meeting are the following: “The fiscal measures for the post-programme period that have been adopted address the underlying structural imbalances in Greek public finances. Decisive steps have also been taken to reduce NPLs and to operationalise the privatisation and investment fund. In addition, we also stand ready to implement an operational growth adjustment mechanism to adjust the EFSF loan re-profiling should growth developments in the post-programme period differ from what will be expected at the end of the programme in 2018. As regards the next steps, following national procedures, the ESM governing bodies are expected to approve the disbursement of the third tranche of the ESM programme amounting to a total of €8.5 bn. Overall, I think this is a major step forward. The Eurogroup commends the institutions, the Greek authorities and, foremost of course, the Greek people for their intense efforts and resolve. We are now going into the last year of the financial support programme for Greece. We will prepare an exit strategy going forward to enable Greece to stand on its own feet again over the course of next year.”
 

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