EU Commission proposes €7bn loan to Greece for July

first_imgClose The European Commission proposed to give Greece a €7bn (£4.92, $7.7bn) bridge loan to cover the countrys financing needs in July using the European Financial Stability Mechanism (EFSM).The Commission believes the EFSM is the best means to provide short-term financing for Greece, Commission vice president for the euro Valdis Dombrovskis told reporters in Brussels.Greece faces urgent financing needs. It has outstanding payments and arrears to the ECB (European Central Bank) and IMF (International Monetary Fund) that need to be paid in the coming days. Euro area leaders therefore invited the Eurogroup to address these issues as a matter of urgency. Member states together with the institutions explored the options available. There are not many, he said.The bridge loan would have a maximum maturity of three months and would be repaid to the EFSM from money that Greece is to get from the eurozone bailout fund, the European Stability Mechanism (ESM) on the conclusion of negotiations on the next, €86bn three-year bailout.The proposal to use the EFSM for the bridge loan is controversial because Britain and the Czech Republic are strongly opposed to it.We are aware of serious concerns from non-euro area member states. We are therefore working on arrangements to protect the non-euro area member states from any negative financial consequences should the EFSM loans not being repaid, Dombrovskis said.Unlike the ESM, which is a eurozone fund, the EFSM is an EU-wide fund, backed by the EU budget and therefore disbursements from it need the approval of all of the EUs 28 governments, rather than just the 19 of the eurozone.But decisions in the EFSM are taken by qualified majority voting, which means that if 16 countries representing 65 percent of the EUs population support a disbursement, its opponents like Britain or the Czech Republic can be outvoted.last_img

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