Greece to get EUR8 billion aid payment - The Best from Greece

Greece is to get a further slice of EU aid after eurozone finance ministers agreed on 21 October to pay over their share of an EUR8 billion loan, the sixth from the country’s first bailout. The decision on the EUR5.8 billion payment was taken after a seven-hour meeting of eurozone finance ministers on 21 October and was the only concrete decision reached during talks riven by disagreements over a second Greek rescue and a boost for the eurozone’s rescue fund.

“The decision on the disbursement of the sixth tranche is a very good, positive and constructive step,” Greek finance minister Evangelos Venizelos said on his way into a meeting of all 27 EU finance ministers on 22 October. Greece was granted the loan after the parliament in Athens waved through a set of further austerity measures designed to trim a deficit that is set to rise to over EUR18.6 billion this year, overstepping the target set under the terms of the rescue package. Greece will now be given until 2012 to meet a new deficit target of EUR14.9 billion.

In a statement after their meeting on 21 October, finance ministers from the 17 single currency countries called on Greece to make further progress on privatisation and economic reforms, noting that “the macroeconomic situation has deteriorated since the fourth [bailout] review and that economic challenges remain large”.

The International Monetary Fund is expected to to sign off on its EUR2.2 billion portion soon so the money can be paid to Greece in mid-November.

However, a report on Greece’s debt sustainability has found that eurozone countries will have to stump up even more money for Greece or force losses of up to 60% on holders of its sovereign bonds if the country is to pay down its massive debt mountain, which will otherwise rise to 186% of GDP by 2013.