Greece gets approval for €8bn bailout

 

BRUSSELS – Greece is to get a further €8 billion bailout from the European Central Bank and the International Monetary Fund, despite failing to achieve cutback targets conditional for more aid.

A joint statement yesterday from the ECB, the IMF and the European Commission acknowledged that the Greek government’s promised austerity plan revival was out of reach – partly because of “slippages in the implementation of some of the agreed measures”.

But, after concluding the fifth review mission to look at the Athens government accounts, the statement from the team of experts representing the three organisations, known as the “troika”, said an €8 billion payment to Greece should go ahead in early November.

Of the total, €5 billion comes from the 17 euro zone countries and the rest from the IMF.

“Once the euro group and the IMF’s executive board have approved the conclusions of the fifth review, the next tranche will become available, most likely, in early November,” said the statement.

Greece had pledged to implement tough-enough austerity measures – public sector jobs and salary cuts, and tax rises – to reach agreed economic deficit and growth improvements in return for the money. The troika statement said Greece may not have achieved all its goals so far but was on the right path. “In the fiscal area, the government has achieved a major reduction in the deficit since the start of the programme, despite a deep recession.

“However, the achievement of the fiscal target for 2011 is no longer within reach, partly because of a further drop in GDP, but also because of slippages in the implementation of some of the agreed measures.”

Meanwhile, the senior partner in the ruling Slovakian coalition government hopes to ratify the expansion of the EU’s European Financial Stability Facility (EFSF) emergency bailout fund that is helping Greece by the end of the week. The junior party in the government said yesterday it would abstain from the vote, forcing the government to turn to opposition parties to push through a deal agreed by the currency bloc to contain the Greek debt crisis.

Even as Slovakia wrangles over giving a green light to the July agreement, euro zone leaders are scrambling to give the €440 billion safety net greater clout to staunch contagion that has begun to seep into the rest of the currency area.

Slovak prime minister Iveta Radicova put her government on the line by tying a vote on the size and powers of the EFSF to a confidence motion.

Even if Ms Radicova loses the vote, as looks likely, she and two of her ruling coalition partners say they will be able to produce a majority for ratification of the EFSF deal by obtaining the support of the largest opposition party.

“There is an assumption that the EFSF, one way or the other, will be approved by the end of the week,” finance minister Ivan Miklos, who supports the measure, told parliament before the vote. The leftist Smer party led by former prime minister Robert Fico has said it would be receptive – in exchange for major concessions including a cabinet reshuffle or early elections.

The fourth ruling party, Freedom and Solidarity (SaS), said it would abstain from the ballot.

It argues that, as one of the poorest members of the single currency club, Slovakia should not pay for the debts racked up by more affluent countries.

“I consider the tying of the bailout ratification vote to a confidence vote in the government as blackmail,” SaS leader Richard Sulik said. “These are things that severely damage Slovakia. Slovakia is not responsible for saving the world.” – (Press Association/Reuters)