Sunday, July 3, 2011

Europe agrees Greece aid payment

Financial Times
July 3, 2011

European finance ministers have approved a much-anticipated €8.7bn ($12.6bn) aid payment to Greece, ensuring the country will not default on its sovereign bonds this month and clearing a hurdle that had spooked global financial markets.

The move came after the Greek parliament this week passed a wrenching €28bn austerity bill which the European Union had set as a precondition for more aid. Athens was at risk of becoming the first developed country in 60 years to default on its debt on July 15 if the aid payment was not approved.

Despite the approval, which came on Saturday evening, European leaders failed to agree on a new €120bn bail-out package for Greece, which many officials had hoped to complete this weekend.

Without a second bail-out finalised, IMF approval of its portion of the next aid payment had been in question, since the Fund had blocked its aid unless a new, longer-term financing plan was in place.

But according to European officials, the Fund was persuaded by the language in the communiqué of last week’s summit of EU heads of government, which vowed it would complete a second bail-out once Greece passed the austerity package.

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