“The board
also decided to immediately disburse 13 billion euros ($14.5 billion) to
Greece. Today’s disbursement is the first part of a sub-tranche of €16 billion,
to be used for budget financing and debt servicing needs,” the ESM said, in a statement Thursday,
announcing the release of the funds. “The remaining 3 billion euros ($3.3
billion) of this sub-tranche will be disbursed at the latest by the end of
November, once Greece has completed additional prior actions.”
While
Thursday’s initial tranche was paid in cash, another 10 billion euros ($11
billion) for recapitalization of banks will be held in a segregated account in
the form of ESM notes.
“The second
sub-tranche of 10 billion euros will contribute to stabilizing the banking
sector, whose situation deteriorated sharply after the imposition of capital
controls in June,” ESM Managing Director Klaus Regling said in the statement.
Under the
terms of the bailout agreement approved
by the Greek parliament last week, the government will have to implement tax
rises and spending cuts in return for funds. Additionally, the
Alexis Tsipras-led government has also promised to overhaul non-performing
loans, and establish a fund to manage the proceeds from the privatization of
state assets.
However,
Tsipras, whose leftist Syriza party came to power last year on an anti-austerity
platform, has faced considerable opposition over the bailout deal from within
his party, with many accusing him of betraying his earlier promises. Following
Friday’s vote in the parliament, where he failed to secure enough votes to maintain his majority, a
confidence vote, eventually leading to early polls seem increasingly
likely.
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