Brussels, 13/12/2012 (Agence Europe) - On Thursday 13 December, the head of Eurogroup, Jean-Claude Juncker, said that next week, Greece will receive €34.3 billion in aid from the European Financial Stability Fund (EFSF), a decision awaited since the summer and which was made possible by the Greek government's determination to get the structural adjustment programme on track, said Euro Commissioner Olli Rehn, along with the successful bond buyback that ended on Tuesday 11 December (see EUROPE 10749).
Klaus Regling, EFSF director general, said that €16 billion of the aid would bail out Greek banks, €7 billion would go to the budget and €11.3 billion used for the bond buyback. Regling said that only budget needs would be covered by cash, the remainder taking the form of bonds and securities.
Three further aid instalments in 2013. There will be three further instalment of aid in the first quarter of 2013. The first batch, €9.2 billion, will be disbursed in January (€7.2 billion to bail out Greek banks and €2 billion for the budget). Two further tranches of €2.8 billion each will follow, one in February and one in March, both to cover budget needs. All three instalments will need the go-ahead of the troika (the European Commission, the European Central Bank and the IMF) depending on momentum being kept up in the reform process.
IMF director general Christine Lagarde said: “I welcome the Eurogroup's decision to support the debt buy back operation for Greece and its assurances to provide additional debt relief if necessary and provided Greece has achieved a primary budget balance in 2013. These steps will ensure that Greece's debt-to-GDP declines to 124 percent by 2020 and to substantially below 110 percent by 2022.” Juncker said it was not certain that other measures would have to be taken.
Recent debt buyback calculations suggest that Greece's debt will reach 128% of GDP in 2020, four percent more than agreed by Eurogroup on 27 November (see EUROPE 10739). To meet the gap, a reduction in the cofinancing levels for the award of EU Structural Funds might be considered. Rehn said that although it was too soon to give any details because the EU27 has not yet agreed on the EU's budget for 2014-2020, this might be a way of reducing the debt by €5 billion, which is 2.5% of Greek GDP.
The Greek prime minister, Antonis Samaras, whose government has been pulling out all the stops since June to get the structural adjustment programme back on track, said when he arrived at the European Summit that sacrifices paid by the Greek people had not been in vain, while Rehn said: “We have been through quite an odyssey since the spring. At that time, a highly unpredictable political situation had many observers convinced that the game was up for Greece in the euro area. As we approach the end of this turbulent year, those Cassandras have been proved wrong.” (EL/transl.fl)