13 December 2012

Eurogroup Statement on Greece - Second disbursement of €49.1 billion approved

Eurogroup statement

The Eurogroup welcomed the result of the debt buy back operation, which will lead to a substantial reduction of the Greek debt-to-GDP ratio.

The Eurogroup reaffirmed that this, together with the initiatives agreed by the Eurogroup on 27 November and full implementation of the adjustment programme, should bring Greece's public debt back on a sustainable path, to 124 per cent of GDP in 2020. Greece and the other euro area Member States are prepared to take additional measures, if necessary, to ensure that this objective is met. On that basis, Member States have authorised the EFSF to release the next instalment for a total amount of €49.1 billion.

The disbursement will be made in several tranches. €34.3 billion will be paid out to Greece in the following days. The remaining amount will be disbursed in the first quarter of 2013. First, a further amount to cover bank recapitalisation and resolution costs will be paid out in January 2013. Second, funds to cover budgetary financing will be disbursed in three sub-tranches, linked to the implementation of specific MoU milestones to be agreed by the Troika.

The Eurogroup is convinced that continued fiscal and structural reforms, building on the strong commitment demonstrated in the recent past and the wide range of reforms already carried out, will allow the Greek economy to return to a sustainable growth path with higher employment, thus paving the way towards a more prosperous future. The Eurogroup strongly encourages the Greek citizens to sustain their efforts and to implement the necessary reforms.

Press release

"This has been a difficult process, but now, with the strong resolve of the Greek government and the close watch of the Troika, we are convinced that the programme is back on a sound track", said President of the Eurogroup, Jean-Claude Juncker. 

The debt buyback operation was one of the measures agreed in November to support Greece's long-term debt sustainability. It resulted in the buyback of debt with a face value of nearly €32 billion. This represents about half of Greece's total outstanding debt held by the private sector. 

Disbursement schedule

Further financial assistance will be disbursed by the European Financial Stability Facility and will come in several tranches: €34.3 billion will be paid in the coming days and the remaining amount will be disbursed in sub-tranches during the first quarter of 2013. 

The first part of the second tranche will cover the costs of bank recapitalisation and resolution and will be paid in January. Remaining payments to cover budgetary financing will be linked to the implementation of specific "milestones" in implementing reform programme measures, to be agreed by the Troika (the European Commission, the European Central Bank and the International Monetary Fund). 

Press release

Ms Christine Lagarde, Managing Director of the International Monetary Fund (IMF), made the following statement:

"I welcome the Eurogroup’s decision to support the debt buy back operation for Greece and its assurances to provide additional debt relief if necessary and provided Greece has achieved a primary budget balance in 2013. These steps will ensure that Greece’s debt-to-GDP declines to 124 percent by 2020 and to substantially below 110 per cent by 2022.

“On this basis, I intend to recommend to the Fund’s Executive Board that it completes the first review of Greece's Fund-supported programme. I expect that a Board meeting could take place in January.”

Press release

© European Council