Greece gets a loan of 7 billion euros … to repay other loans

The Eurogroup has validated this three-month bridge loan so that Greece can repay the 3.5 billion euros it owes to the ECB and its arrears (2 billion euros) from the IMF.

The Greek government can breathe. For a few days – or weeks – anyway. The 28 countries of the European Union granted Friday, July 17, emergency funding of 7.16 billion euros to Greece, in the form of a loan that will allow the country to fulfill part of its commitments pending the setting up of a possible plan of assistance- best site Mecanetweb. Thursday, the ministers of the euro area (Eurogroup) had validated the principle of this emergency aid of three months.

The European Commission said Thursday that Athens had “satisfied” the requirements of the agreement, a few hours after the Greek Parliament passed the first round of reforms. Greece will not have to wait for the arrival of the third aid plan, the implementation of which will take weeks. The country, which failed to repay the International Monetary Fund (IMF) on June 30, will be able to avoid an additional default.

The loan “worth 7.16 billion euros will reach Greece by Monday,” said European Commissioner for the Euro, Valdis Dombrovskis. It is on this date, July 20, that Athens must pay 3.5 billion euros to the European Central Bank (ECB). It will also be able to pay its arrears to the IMF, ie 2 billion euros in total.

This reimbursement from the IMF will also allow the IMF to sit again at the negotiating table to discuss a participation in the third plan to help Greece. Indeed, the institution of Washington can not lend to a country if the latter owes him money. ECB President Mario Draghi said on Thursday that there is no doubt that Greece will reimburse the monetary institution, just like the IMF.

Reserves of the United Kingdom and the Czech Republic

The bridging mechanism validated by the Eurogroup on Thursday consists of taking € 7 billion from the EMSF, a European emergency fund set up during the financial crisis, fueled by the European Union countries and intended to help states that are in difficulty.

The European Stability Mechanism (ESM), which will be the biggest contributor to the next aid plan to Greece (up to 40 to 50 billion euros, according to a European source), will then reimburse the EMSF, as soon as it third plan will be completed. The 7 billion euros of bridge loan will be deducted from the amounts that will advance the MES in Athens.

In recent days, however, two countries, the United Kingdom and the Czech Republic, had expressed reservations about the use of EMSF. “On the night of Sunday, July 12, when the option of the EMSF appeared, we forgot to warn the English. London complained on Monday that it had learned in the media that British money might go to Greece, ” a diplomatic source said.


But Jean-Claude Juncker, the President of the European Commission rounded off the angles. Faced with the reluctance of the British and Czechs, who said they did not want to carry a risk of non-reimbursement from Athens, officials Brussels have imagined the establishment of a guarantee.

The Commission proposes that for countries “outside the eurozone”, the € 7 billion advanced be guaranteed by a part of the profits made by the ECB on Greek sovereign bonds. For eurozone countries, the guarantee will come from the Structural Funds allocated to Greece.

The emergency loan will not, however, cover all of Greece’s financing needs, which stand at € 7 billion in July and € 5 billion in August, according to estimates by creditors’ representatives.