More Money for Greece: EU Ready to Redistribute €10 billion

Written by | Thursday, November 12th, 2015

The Eurozone countries will provide Greece with another tranche of funding including money for bank recapitalization only after the country implements the reforms it had promised. Eurozone finance ministers reminded Athens of its pledge that the conditions should be met by next week. France Finance Minister Michel Sapin said that Greece was making considerable effort to scrupulously respect and meet the conditions of the July deal. Greek officials emphasized that they want to fulfill all the points of the bailout program but they also need to ensure social cohesion and welfare.

The October stress test conducted by the European Central Bank (ECB) revealed that Greek banks needed a total of €14.4 billion in extra capital if they were to go through the eventuality of adverse economic conditions. Some of the required sum will probably come from private investors but the Eurozone will have to provide the rest using the bailout fund of €10 billion. The money in the bailout fund had been earmarked for this purpose already earlier but it is not yet clear whether the entire sum of €10 billion will be needed.

The ministers commented that they would wait for the “finalization of all the measures in the first set of milestones and the financial sector measures which are essential for a successful recapitalization process”. The recapitalization money is in the form of bonds of the Eurozone bailout fund that can be transferred to the Hellenic Financial Stability Fund (HFSF), which would then redistribute the funding to the country’s banks. According to a joint statement issued by the finance ministers, Eurozone is now ready to support “the disbursement of the 2 billion euros of sub-tranche linked to the first set of milestones and the transfer to the HFSF of the funds needed for the recapitalization of the Greek banking sector out of the €10 billion earmarked for this purpose, provided that the agreed conditionality is met”.

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