Euro zone ministers endorse Greek bailout

Eurozone finance ministers in Brussels have approved the first $29-billion payment of a $93-billion bailout deal for Greece after the Greek Parliament approved the package earlier Friday.

Eurogroup chairman Jeroen Djisselbloem said that there were “differences” among foreign ministers of Eurozone, but they “managed to solve the last issues.”

Greece needs the money from international creditors by August 20, when it must repay about $3.5 billion in debt to the European Central Bank.

The Eurozone decision saved Greece from the default on its debts and helped to avoid its exit from the single currency Eurozone.

International Monetary Fund chief Christine Lagarde, who took part in the meeting by teleconference, said in a statement that Greece must be given more debt relief.

“I remain firmly of the view that Greece’s debt has become unsustainable and that Greece cannot restore debt sustainability solely through actions on its own,” she said.

Lagarde also said it is too soon to say whether the IMF would participate in the bailout, saying the IMF’s board will consider the matter in October.

Finance ministers at Friday’s meeting said they are willing to consider additional measures. However, several Eurozone countries have previously said they oppose any additional debt relief for Greece.

The bailout package passed the Greek parliament by a comfortable margin, but many lawmakers from Prime Minister Alexis Tsipras’ leftist Syriza party voted against the deal.

Sapin lauds Greek government

Finance Minister Michel Sapin of France, which has championed a new loan, praised the Greek government.

Sapin said the Greek government had taken its responsibilities in terms of its choice and proposals, but also politically, with a vote approving the bailout.

The French finance minister spoke just hours after Greek lawmakers endorsed a new bailout package after a long debate, which will require Athens to enact tough and unpopular reforms in return for another loan. The vote came at a political cost for Prime Minister Alexis Tsipras, who is fighting waning support from his own Syriza party and may have to call a confidence vote.

Widening divisions

Growing discord within Syriza could split the party and lead to early elections. The stock market in Athens slid in afternoon trading.

Tsipras told lawmakers that the bailout package is a “necessary choice” for the nation, despite unwelcome tax hikes and spending cuts.

Greece has been in financial turmoil for more than five years and had already received two bailouts when it came dangerously close to defaulting in June.

Critics say Greek citizens already have endured enough financial constraint. They argue that the austerity measures introduced as conditions for the third bailout package would further damage Greece’s economy.

Doubts remain

Heading into the Brussels meeting, Eurogroup head and Dutch Finance Minister Jeroen Dijsselbloem said doubts about the wisdom of a new bailout for Greece remained, including on the part of the International Monetary Fund.

“Debt sustainability is still a major point of concern, certainly for the IMF. The IMF will certainly look at that and we will look at it in October,” said Dijsselbloem. “And hopefully we can make sure that it is sustainable by then, and give further guarantees, if necessary, so the the IMF can come on board in October because that’s very important to all of us.”

Germany also wants the IMF to back a new bailout before it signs off on it. Berlin has lent Athens the most money of any Eurozone member, and there is considerable German skepticism over whether it will be repaid. German officials have been pushing instead for lending Greece a smaller amount for now – enough so it can repay $3.2 billion it owes the European Central Bank by next Thursday (August 20).

Greece is not the only struggling eurozone member, although it certainly faces the biggest headaches right now. New statistics show the currency union as a whole grew only 0.3 percent in the second quarter of this year, driven largely by powerhouse Germany. The biggest surprise was Greece, whose economy actually grew 0.8 percent during that period.


(Main photo: Jeroen Dijsselbloem, on the left, and Valdis Dombrovskis: EC Audiovisual Service)