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1st LD Writethru: Eurogroup agrees 3-year ESM support to Greece

Xinhua, July 16, 2015 Adjust font size:

The Eurogroup on Thursday agreed to offer Greece a three-year grant from the European Stability Mechanism (ESM), following the Greek parliament's approval of austerity measures demanded by creditors earlier in the day.

"We reached today a decision to grant in principle a three-year ESM stability support to Greece, subject to the completion of relevant national procedures," the group said in a statement after a teleconference among its finance ministers.

European Union (EU) institutions are expected to swiftly negotiate with the Greek government on a memorandum of understanding "detailing the policy conditionality attached to the financial assistance facility," the statement said.

The negotiation will follow the "completion of the relevant national procedures and the formal decision by the ESM board of governors expected by the end of this week," the statement noted.

The Eurogroup urged Greek authorities to "swiftly adopt the second set of measures by July 22 as foreseen in the Euro Summit statement."

Heads of the 19 euro zone members on Monday reached a fresh bailout deal for Greece worth 86 billion euros (about 94 billion U.S. dollars) and promised swift negotiations on a MoU as soon as Greek lawmakers ratify their summit statement and approve a first set of austerity measures on July 15.

A total of 229 Greek lawmakers of the parliament's 300 seats on early Thursday voted in favor of the summit statement and the first set of taxation and pension system reform measures, with 64 against and six abstentions.

The approvals are viewed as prerequisites for Greece and its creditor's further talks on the new bailout plan.

The European Central Bank (ECB) on Thursday also decided to increase emergency funding for Greek banks by 900 million euros, a move to help remove the country's ongoing capital controls which were introduced June 29.

Greece is in urgent need of money as it faces a 3.5 billion euros payment to the ECB on July 20. The Eurogroup has proposed a 7 billion euros bridge loan from an EU-wide fund before the full ESM bailout fund is operational. (1 euro = 1.09 U.S. dollars) Endit