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Greece receives new bailout funds, repays ECB 3.2 bn euro

Greece on Thursday made a 3.2 billion euro ($3.56 billion) payment to the European Central Bank on a maturing government bond, tapping cash from its first disbursement of bailout money.

world Updated: Aug 20, 2015 13:38 IST
Greece crisis,Bailout,European Central Bank

Greece on Thursday made a 3.2 billion euro ($3.56 billion) payment to the European Central Bank on a maturing government bond, tapping cash from its first disbursement of bailout money.

"The payment was made, the funds are on their way," the official told Reuters, declining to be named.

Greece received the first tranche of funds from its new bailout loan on Thursday after the European Stability Mechanism approved a rescue of up to 86 billion euros on Wednesday.

The first tranche amounts to 13 billion euros, of which about 12 billion euros will be used to pay down debt, including an earlier bridge loan and the maturing Greek government bond held by the ECB.

The initial tranche was paid in cash. Another 10 billion euros for the recapitalisation of banks was sent to a segregated account in the form of ESM notes.

On Wednesday, Greece got the go-ahead to start repaying its debts and reviving its economy after eurozone finance ministers formally approved a third reforms-for-rescue of up to 86 billion euros.

AFP quoted an unnamed source close to the matter as saying that Greece would receive a sum of 23 billion euros ($25.5 billion) on Thursday morning, thereby allowing Athens to make the loan repayment of 3.4 billion euros due the same day to the ECB.

The all-clear from the finance ministers in the 19-country eurozone came after the new bailout was approved by European parliaments, including the Bundestag of Germany, Greece's effective paymaster.

Pending endorsement from key national parliaments, Jeroen Dijsselbloem, the Dutch finance minister, and the other eurozone finance ministers had on August 14 approved the bailout to keep Greece in the single currency bloc, pay its bills and revive its shattered economy.

The German parliament voted by an overwhelming majority on Wednesday to back the third bailout, with Chancellor Angela Merkel spared a major rebellion of deputies opposing the aid.

Interrupting their holidays for the second time this summer to cast ballots on a Greek rescue, lawmakers in the Bundestag lower house approved the 86 billion euro ($95 billion) rescue plan by 453 votes to 113. Eighteen abstained.

Greek Prime Minister Alexis Tsipras was on Wednesday mulling whether to call for early elections after the austerity bailout split his radical left Syriza party, leaving him powerless to push further reform bills through parliament.

A decision is expected next week.

Tsipras rode to power in January on a wave of popular anger against the tax hikes, spending cuts and reforms demanded by creditors in exchange for two previous bailouts costing 240 billion euros.

Tsipras has said that Greece's creditors - the European Union, European Central Bank, International Monetary Fund and the European Stability Mechanism - have agreed to discuss public debt relief measures when a first assessment of reform compliance is completed in November.

The debt currently stands at 312.8 billion euros, the finance ministry said on Wednesday.

The Greek premier has also called for the European Parliament (EP) join the quartet of creditors in overseeing the recently-approved bailout deal.

The request was made in a letter sent on Wednesday to EP president Martin Schulz in which Tsipras requested the "direct and full involvement of the EP -- as the fifth actor in the context of the so-called creditors' quartet".

The initial 23 billion euro payment will see 10 billion euros placed in a fund to recapitalise Greek banks while another 13 billion euros will be partly used to pay back both the ECB and to cover an EU bridging loan of 7.16 billion euros, which was given in July to allow Athens to honour previous commitments to the ECB and the IMF.

First Published: Aug 20, 2015 13:15 IST