Eurozone approves new bailout, small tranches for Greece

Eurozone finance ministers approved late on Monday the new 130-billion-euro bailout for Greece but it remains to be seen how most of the loans will be dispersed.
The ministers agreed on the new package after Greece completed the major part of its debt restructuring program by swapping the bonds held by some 95 percent of investors who held Greek notes.

The swap reduces Greece’s debt by about 100 billion euros, which appears to have convinced the eurozone and the International Monetary Fund to proceed with the new bailout.

"As agreed, new official financing of 130 billion euros will be committed by the euro area and the IMF for the period 2012-2014,» said Jean-Claude Juncker, who chairs the Eurogroup.

"We welcome the [IMF's] proposal to recommend 28 billion euros to the Greek facility. We look forward to the discussion and the decision by the IMF board on March 15."
He said he was confident the IMF would agree the money but that he was «still dependent on that decision».

"Against this background, we approved the launch of the second programme, pending the completion of the national procedures."

Thanks to a high take-up of the bond swap offer, Greece's debt would fall below a target of 120 percent of GDP in 2020, reaching 117 percent, from 160 percent now, he said.

The Eurogroup decided on the disbursement of loans for Greece for the next three month. Athens will receive 5.9 billion euros in March, 3.3 billion euros in April and 5.3 billion in May.
Greece had been hoping to receive more funds at the start of the program but sources said that Germany, the Netherlands and others expressed concerns that the Greek government may slip in its implementation of the program due to the elections expected in late April or early May.

The final decisison on the disbursement of the funds will be taken at the Euro Working Group meeting on Wednesday.
Speaking to Skai TV’s “New Files” program before the Eurogroup meeting, Juncker insisted there was no question of Greece leaving the eurozone.

“I never doubted that Greece would remain in the euro and I never will,” said Juncker. “Greece is an old European democracy but it is facing huge problems. It is taking the measures we asked for and I cannot see any reason that we should continue this silly discussion. We are feeding the markets with our speculation. I will never take part in this.”
Juncker said that Greece’s second bailout should also be its last if Athens sticks to the reform and fiscal targets it has agreed with the eurozone and the International Monetary Fund. However, in keeping with recent comments by German Finance Minister Wolfgang Schaeuble, Juncker did not rule out the possibility a third package would be needed.

“It depends on the way the second program is implemented,” he said. “If Greece continues to take effective measures, reduces its fiscal deficit, in other words if it implements the program, I don’t see the need for a third support package of similar size.”

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