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Abu Dhabi, UAETuesday 25 September 2018

Greece wins €6.7bn loan as part of third ESM bailout instalment

European Stability Mechanism said the approval came after the Greek government completed a series of required reforms

The Bank of Greece headquarters in Athens. The ESM has approved the next tranche of bailout funds for the country. Thanassis Stavrakis/AP
The Bank of Greece headquarters in Athens. The ESM has approved the next tranche of bailout funds for the country. Thanassis Stavrakis/AP

Europe's bailout fund on Tuesday approved a €6.7 billion (Dh29.56bn) loan instalment to Greece as part of its third international rescue programme, with payment of the first €5.7bn expected this week.

The European Stability Mechanism said the approval came after the Greek government completed a series of required reforms. The funds will be used to service public debt and clear domestic arrears.

"Today's decision ... acknowledges the hard work by the Greek government and Greek people in completing an extensive set of reforms," said ESM head Klaus Regling. The reforms were in tax policy, privatisations and the resolution of non-performing loans, among others.

The ESM said the initial €5.7bn are to be disbursed Wednesday. The remaining €1bn, to be used for clearing arrears, may be disbursed after May 1 if the country "makes progress in reducing its stock of arrears".

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Greece has depended on billions of euros from international rescue loans since 2010, and its third bailout is due to end this summer. In exchange for the money, successive governments have had to implement often painful economic and structural reforms, including tax increases and severe cuts to pensions and public spending.

Mr Regling said he was "confident that Greece is on track to successfully exit the ESM programme in August 2018, provided that the remaining reforms are implemented by the Greek government".

Greece's financial crisis has wiped out a quarter of the economy and led to persistently high unemployment, which continues to hover above 20 per cent. The frequently unpopular reforms have also led to street protests.

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