EU offers Greece €7bn bridge loan for July, if Athens adopts reforms – media

Reuters/Francois Lenoir
European Commission has offered to provide Greece a €7 billion bridge loan for the next three months if the Greek Parliament adopts the reforms agreed with the international creditors on Monday.

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On Wednesday the Greek parliament is going to vote on the debt deal agreed by the creditors and Prime Minister Alexis Tsipras. This vote could split the ruling Syriza party, as there is no unanimity within it. This could also put an end to Syriza’s anti-austerity coalition with right-wing ANEL, resulting in new elections.

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The European Commission also proposed using the European Financial Stability Mechanism (EFSM) to provide a quick bridging loan for Greece, says Financial Times.

On July 20 Greece will have to pay €3.5 billion to the European Central Bank. If Athens is not able to pay this debt, the ECB will be forced to deny Greek banks access to emergency liquidity assistance (ELA) that enables them to stay afloat.

The money from the EFSM will help Greece to settle the arrears. Greece has received €89 billion in ELA, and the ECB is reluctant to increase the amount.

International creditors said they were ready to discuss restructuring Greek debt after the first evaluation of the reform program implemented by Athens, said Finance Minister Euclid Tsakalotos on Wednesday, speaking ahead of the vote in parliament.

According to him, “Alexis Tsipras’ government has achieved greater commitments from the partners in the restructuring of Greek debt than the previous governments.”

READ MORE: ‘Agree or go bust’: Tsipras explains, defends ‘bad’ bailout deal ‘imposed’ on Greece

Tsakalotos acknowledged the agreement contains measures that would contribute to a recession in the country but added they could be turned into economic growth.

In a report released Tuesday night the IMF said Greek state debt is poised to jump to 200 percent of GDP or national income in the next two years, calling it “highly unsustainable”.

The troika of international creditors – the IMF, the ECB and the European Commission - agreed to give Greece a third bailout package on Monday. The financial aid from the creditors could be as much as €86 billion in the next three years. The agreement came after PM Tsipras made serious concessions on taxes and pensions.

Speaking on national TV on Tuesday, Tsipras said he signed the deal, “with a knife at his neck”. However, he confirmed his intentions to finalize the agreement.