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Europe

Greece secures €6.8 billion bailout tranche

© AFP

Video by Luke SHRAGO

Text by News Wires

Latest update : 2013-07-09

Eurozone finance ministers agreed on Monday to release 6.8 billion euros in aid to Greece as part of a second bailout programme, provided certain conditions are met, with the first 4 billion euro instalment to be paid out "in the coming weeks".

Eurozone finance ministers agreed Monday to unlock billions of euros in fresh aid for Greece on condition it press ahead with urgently needed reforms.

The Eurogroup ministers, holding their last meeting before the summer break which was also attended by IMF chief Christine Lagarde, agreed to pay out 6.8 billion euros in fresh aid to Athens.

However, the funds would not be handed over in one lump sum, but in different instalments subject to certain conditions being met.

"The Eurogroup commends the authorities for their continued commitment to implement the required reforms that have already led to a significant improvement of cost competitiveness, an impressive strengthening of the fiscal position and a more resilient banking sector," the group said in a statement read out by its chief, Dutch Finance Minister Jeroen Dijsselbloem, at a news conference.

"The Eurogroup therefore expresses its appreciation for the efforts made by the Greek citizens.

"At the same time, significant further work is needed over the next weeks to fully implement all prior actions required for the next disbursement," Dijsselbloem added.

In particular, the required reforms of the public administration -- Athens has pledged to axe 4,000 state jobs by the end of the year, as well as redeploy 25,000 civil servants across its vast bureaucracy -- needed to be carried out.

And further efforts were needed to improve tax revenue collection.

"It is time to step up momentum of reform in Greece," said EU economic and monetary affairs commissioner Olli Rehn.

Under the terms of the deal, some 4.0 billion euros would be paid out "in the coming weeks," and a further 1.0 billion euros in October, both sums shared by the eurozone rescue fund EFSF and European central banks.

And the International Monetary Fund would stump up 1.8 billion euros.

IMF chief Lagarde said the board of her institution would review the report of Greece's "Troika" of creditors -- the IMF, the European Central Bank and the EU -- at the end of July.

And it would "review the various prior actions agreed with Greek authorities.

And there was "every reason to expect" that the funds would be disbursed, "given the work done by the Troika and the staff agreement reached yesterday," Lagarde said.

The Troika had concluded a technical audit of reforms in Greece earlier.

Crisis in Portugal also discussed

Eurogroup ministers also discussed the situation in another bailed-out country -- Portugal, which sunk into a political crisis over the shock resignations of two key ministers this month.

European leaders have asked Lisbon to clarify the political situation quickly, fearing that uncertainty could throw the country off its course to exit the troika's rescue programme by 2014.

Dijsselbloem said he was reluctant to "go into national politics too much. But political stability was needed to push forward the programme."

German finance minister Wolfgang Schaeuble had conceded that "there are occasionally government crises" in EU member states.

But Portugal appeared to have overcome its crisis already, Schaueble said.

"In recent years, Portugal has shown itself to have very stable conditions.

"There is every indication that they've overcome" the crisis. And on the matter of the reforms, "Portugal is on a very successful path," the German minister said.

"I feel fairly relaxed that Portugal will continue along its successful path."

Portugal's doggedness in implementing required reforms has won praise from the international creditors but the painful austerity measures have been immensely unpopular at home.

Disagreements over the reforms sparked the latest crisis, with foreign minister Paulo Portas resigning because he disagreed with Prime Minister Pedro Passos Coelho's decision to hold fast to the path of austerity.

After a series of negotiations with Portas, Passos Coelho announced a deal this weekend to keep the shaky coalition together.

Under the accord, Portas would remain with a bigger role as deputy prime minister, tasked in particular with coordinating the country's economic policies as well as relations with the country's international creditors.

On Tuesday, the finance ministers from all 28 European Union countries are expected to give the final green light to Latvia to join the eurozone.

They would also have to set an exchange rate between the Latvian lats and the euro.

(AFP)

Date created : 2013-07-08

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