Senior officials from eurozone finance ministries agreed Friday on a disbursement of fresh loans to Greece worth some EUR7.5 billion ($8.4 billion), bringing to a conclusion a protracted review of the country’s bailout and ensuring the country doesn’t default to its creditors later this summer.
The officials, who make up the board of directors of the European Stability Mechanism, the eurozone bailout fund, agreed to disburse the next slice of financial aid after Athens completed a set of outstanding economic overhauls it had promised to undertake.
The disbursement comes after the Greek parliament passed a series of painful austerity measures agreed under the country’s up to EUR86 billion bailout, including tax rises and an overhaul to the country’s costly pension system.
In exchange for the financial aid, the country’s left-wing government also signed off on a framework to free up the sale of bad loans and agreed to set up a privatization fund.
Greece needed fresh bailout funding by mid-July at the latest, when it must repay heavy debts, including bonds held by the European Central Bank.
Part of the new loans will also go toward repaying arrears–money the government owes domestic suppliers. This, Greek and European officials hope, could give the struggling economy a much-needed boost.
A further EUR2.8 billion will be available to Greece, the ESM said, on the condition that it clears its arrears and completes further agreed reforms.