Eurozone Backs €7bn Bridging Loan For Greece

Eurozone ministers agreed the loan from an EU-wide fund, enabling Greece to pay back arrears to the European Central Bank (ECB).

Sky News reports that any contribution to the loan by Britain would be protected.

“It will be an EU-wide bridging loan, just to keep Greece going over the course of the next days and weeks, worth €7bn,” Sky’s Economics Editor Ed Conway said.

“The UK will contribute in theory (…) but there’s collateral in their set against any possible default, that protects the UK.”

Without the bridging loan, Greece does not have the money to make a €4.2bn payment to the ECB, that is due Monday.

The deal involves the EU’s emergency funding program – the European Financial Stabilisation Mechanism, or EFSM.

Details of the bridging loan were announced by Eurogroup chairman Jeroen Dijsselbloem.

Mr Dijsselbloem also said it was “realistic” to expect to raise €50bn from the sale of Greek state assets.

This money would be raised over more than the three years of the bail-out Greece signed up to last weekend, Mr Dijsselbloem said.

“Rather than a fire sale, privatisation will be pursued slowly in order to ensure better returns are achieved,” Mr Dijsselbloem said.

In another development, the ECB said it has increased emergency funding to Greek banks by £628m for one week.

ECB president Mario Draghi said the money was offered following a request from the Bank of Greece.

He said the ECB’s total exposure to Greece was now €130bn.

Eurozone leaders agreed the bailout in principle in Brussels on Monday.

It was agreed on condition that the Greece passed reforms on pension curbs and taxation increases by Wednesday.

Meanwhile, Greece’s interior minister, Nikos Voutsis, said the government is likely to call an early election in the autumn.

He said the election would be called after the government lost support in parliament for an austerity law.

The left-wing government narrowly avoided collapse in the vote on Thursday – a vote that was a key requirement for a third Greek bailout.

He told Sto Kokkino radio that elections are “very likely” and that if they don’t take place in September, then it will be October.

The austerity bill was approved with opposition party support.

But the ruling Syriza party saw 38 of its 149 politicians defy Prime Minister Alexis Tsipras by either voting against or abstaining.

Mr Voutsis said the government could have collapsed if the number of dissenters had risen to 42.

That would have made it more difficult for Mr Syriza to legislate.

The President of the European Central Bank, Mario Draghi, has said it is “uncontroversial” that Greece is in need of debt relief.

The main discussion in the coming weeks should focus on how this relief can be delivered within the existing EU legal framework, he said.