Disbursement of a 10.3 billion euros loan installment to Greece will be made in two sub-tranches, one 7.5 billion euros and another 2.8 billion euros. The first sub-tranche will be disbursed in June to cover the country’s debt obligations to European Central Bank (in July) and to the International Monetary Fund and to begin repayment of the state’s overdue debt to the private sector. Disbursement of the first sub-tranche will be made after completion of the review of the programme, which includes a last inspection of a recent law voted in the Parliament and confirmation of full implementation of prior actions and in particular corrections in a legislation to open the market of loan sales (including loans with state guarantee), a pension reform (retrospective return of EKAS a supplementary pension benefit) and completion of prior actions in privatizations (ratification of a contract for Helliniko, Egnatia Road). Disbursement of the first sub-tranche will have to be approved by national parliaments of Eurozone member-states.
A second sub-tranche of 2.8 billion euros will be available from September, according to the repayment of state overdue debt to the private sector.
Installments on a further debt servicing will be related with privatization landmarks, including a new Privatization Fund, corporate governance in Greek banks (possible change in management), a new fully independent Revenue Authority and interventions in the energy market. Assessment of prior actions will be made by the institutions and ratification by the Euro Working Group and the ESM.
Finance ministry officials said that around 700 million euros per month until October will be earmarked for repayment of state overdue debt to the private sector, boosting liquidity in the market with 3.5 billion euros.
A Eurogroup meeting toned down in wording on primary surplus targets by noting that fiscal commitments will be reviewed in 2018.
Finance ministry officials said that an agreement to safeguard debt sustainability is adjusted to the characteristics of the Greek economy and ensured, for a long period of time, the funding of the economy under very favorable terms. They also noted that agreed interventions for debt paved the way for Greece’s exit in capital markets through boosting investment confidence and lifting uncertainties in the economy.
According to the same sources, it was agreed that Greece will not pay more than 15 pct of GDP on debt servicing in the medium-term, raising this ceiling to 20 pct of GDP. This ceiling will include payment of Treasury bills and it is low compared with all comparative indexes for countries with similar economic characteristics. It is also fundamentally reducing the country’s funding needs for the coming years, directly resolving the debt issue. These measures (short-, medium- and long-term) for a debt restructuring offered a clear road map stabilizing liquidity conditions in the economy, while a sum of 20 billion euros saved from a bank recapitalization scheme were “available” for debt repurchase actions.
European partners have essentially committed to begin moves for a debt restructuring and to plan a “large package” for implementation after 2018, on the condition that the programme will be implemented, while the IMF agreed to recommend its participation in the Greek programme this year after the European partners completed a new debt sustainability report.
Poul Thomsen, head of European affairs in the IMF, said that such measures will be implemented after the programme was completed fully in July 2018 and will include measures of a more efficient management of debt (Eurozone proposal) combined with a provision to create a action mechanism operating on a long-term horizon. For 2017, the Eurogroup meeting approved interventions leading to a reduction of interest payment of around 220 million euros.
Source:banksnews.gr
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