ESM's full press release after approval of Greek loan agreement
The European Stability Mechanism (ESM) posted on its website late on Wednesday a press release announcing the approval of Greece’s 3-year aid package following a teleconference of the eurozone’s finance ministers.
"The Board of Governors of the European Stability Mechanism (ESM) approved today the ESM Managing Director’s proposal for a Financial Assistance Facility Agreement (FFA) with Greece. Under the terms of this agreement, which the ESM Board of Directors also approved on Wednesday, the ESM will provide up to €86 billion in financial assistance to Greece over three years. The FFA is the ESM’s loan contract with Greece, which ESM Managing Director Klaus Regling and the Greek Minister of Finance Euclid Tsakalotos will sign.
The Board of Governors, which comprises the 19 euro area finance ministers, also adopted a Memorandum of Understanding (MoU) with Greece, specifying the policy measures that the Greek government has agreed to undertake in order to tackle the main challenges facing its economy.
The Greek government committed to reforms including: restoring fiscal sustainability; safeguarding financial stability; boosting growth, competitiveness and investment; and reforming the public administration. The European Commission will sign the MoU on behalf of the ESM together with the Greek finance minister. The Board of Governors expects that the institutions take into account the Eurogroup Statement of 14 August 2015 when monitoring compliance with the conditionality detailed in the MoU and when reviewing such conditionality.
The ESM funds will be used for budgetary expenditures, arrears clearance and the build-up of cash buffers, debt service, and banking sector recapitalisation. The precise amount of financial assistance from the ESM will depend on the International Monetary Fund’s (IMF) decision regarding the extent of its participation in financing the programme. The IMF will take this decision following the completion of the first programme review.
The total amount of financial assistance will also depend on Greece’s success in implementing policy reforms, which are designed to ensure that Greece returns to market financing at reasonable cost before the programme ends. Privatisation proceeds may additionally reduce the overall amount of financial assistance needed.”
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