- How much will be disbursed in the current (fourth) tranche?
The fourth tranche amounts to €6.7 billion, and will be disbursed for the following needs:
- €3.3 billion for debt service
- €1.9 billion as a cash buffer
- €1.5 billion for domestic arrears clearance
€5.7 billion will be disbursed on 28 March, and the remaining €1 billion - for the purpose of arrears clearance - may be disbursed from 1 May 2018 but no later than 15 June 2018. This is dependent on the progress made by the Greek government in reducing its stock of arrears and improving the effectiveness of the e-auction system. This disbursement is subject to a further decision by the ESM Board of Directors.
- What conditions were tied to the payment of this tranche?
The Greek government completed an extensive set of reforms (a total of 110 prior actions) in the field of tax policy, public financial management and procurement, public revenue reforms, the social welfare system, resolution of non-performing loans (NPLs), and privatisation. On 2 March 2018 the European Commission submitted a
compliance report, which states that all the required prior actions were completed. This paved the way for the approval of the disbursement by the ESM Board of Directors.
- How are arrears being cleared by the Greek government?
Arrears are being cleared using a combination of Greece’s own resources and disbursement proceeds. For the disbursements of the fourth tranche, arrears will be cleared using a combination of Greece’s own resources and disbursement proceeds in the proportion of at least €1 of own resources for every €1 of disbursement proceeds. The objective of the programme as a whole is to reach a zero arrears target by August this year..
- Will there be more disbursements under the programme?
The fourth and final review of the ESM programme for Greece is currently under way, and a new set of prior actions will be implemented by the Greek government. Once completed, further disbursements will take place; the amount will be determined based on Greece’s financing needs both within and beyond the programme horizon. Any ESM disbursements can be made no later than 20 August 2018, when the availability period of ESM financial assistance comes to an end.
- What is the background to the amendment to the Financial Facility Agreement (FFA), which also occurred today?
The development of a new fund to hold valuable Greek state assets, and manage them for the purposes of debt reduction and to fund investment in Greece, was foreseen as an important part of the third programme. This fund was established in 2016 as the Hellenic Corporation of Assets and Participations (HCAP). The HCAP has now become fully operational and its structure has been finalised during 2017. In this context, the amendment to the FFA approved today will add the HCAP as a party to the FFA once the amendment is signed by Greece. HCAP owns and manages key Greek assets to increase their value as well as the quality of services that state-owned enterprises and real estate provide to the Greek public. The HCAP’s financial results will contribute to debt reduction and to investment in Greece.
- What is the maximum amount of ESM loans to Greece, and how much has been disbursed so far?
In August 2015, the ESM committed to provide up to €86 billion in financial assistance to Greece. So far, €45.9 billion has been disbursed (taking into account the current €5.7 billion disbursement). After a €2 billion repayment by Greece in February 2017, the outstanding loan amount, i.e. the amount to be repaid by Greece, is €43.9 billion. It is already clear today that it will not be necessary to disburse the full amount of the ESM financial assistance available.
- What is the total amount of loans provided to Greece by the ESM and EFSF?
Apart from the €45.9 billion in loans from the ESM, Greece also received €141.8 billion from the European Financial Stability Facility (EFSF) in the years 2012-2014, which amounts to €187.77 billion disbursed in total from both institutions. The outstanding loan amount is €174.8 billion. The ESM and EFSF rescue funds have 53% of Greek public debt on their books and are by far Greece’s largest creditor.
