World Economy

Greece May Seek Up to $26b as First Aid Tranche

Greece May Seek Up to $26b as First Aid Tranche
Greece May Seek Up to $26b as First Aid Tranche

Greece may seek €24 billion ($26.4 billion) in a first tranche of bailout aid from international lenders in August to prop up its banks and repay debts falling due at the ECB, reports said.

Athens is now in talks with the European Commission and the International Monetary Fund to secure up to €86 billion ($94.48 billion) in bailout aid. It will be its third bailout since 2010, Reuters reported.

Avgi newspaper, which is close to the leftist Syriza government, said Greek authorities expected to conclude talks with lenders by mid-August.

The first tranche of €24.36 billion would be used to channel €10 billion as an initial recapitalization to Greek banks, €7.16 billion to repay an emergency bridge loan, €3.2 billion toward Greek bonds held by the European Central Bank and other payments, Avgi said.

It has been estimated that Greek banks may require up to €25 billion to be recapitalized, a shortfall exacerbated by an outflow of deposits when a stalemate with lenders threatened Athens’ place in the eurozone.

The flood of money leaving the country culminated in authorities imposing capital controls on June 29 to prevent a financial meltdown.

In exchange for funding Greece has accepted reforms including making significant pension adjustments, increasing value added taxes, overhauling its collective bargaining system, and measures to liberalize its economy and limit public spending.

If the talks are not completed in time, European authorities may have to provide further temporary financing as they did with a July bridge loan, though Avgi said that possibility had not been discussed with lenders.