Greece secures $8.7bn in rescue loans

Greece has secured a much-needed $8.7bn in rescue loans after an inspection by its international creditors who said that despite initial progress, more still needed to be done.

The IMF, European Central Bank and the EU – known as the “troika” – have demanded Greece fire thousands of civil servants and slash government spending in order to secure the loans.

Officials from the three organisations said on Monday Greece’s finances were improving, although they said the country was making reforms too slowly.

Greece’s economy has been in recession since 2007 and unemployment has spiraled to above 27 percent, in part because of the reforms and austerity measures it is implementing.

The troika recommended that the next loan payments be made. The finance ministers from the 17 countries that use the euro agreed.

Belgian Finance Minister Koen Geens said the loans would be divided into three groups and disbursed in July, August and October.

“Greece is getting on track,” said Wolfgang Schaeuble, Germany’s finance minister, as he left the meeting in Brussels.
“It is not easy for them.”

After years of overspending, Greece nearly went bankrupt and is now surviving on rescue loans.

To ensure that the government keeps up with the reforms it promised in exchange for $309bn in bailout loans, its creditors turn over the funds slowly – and only after rigorous assessments of the country’s progress.

The troika said the country’s reform programme remained “broadly in line” with projections.

It also laid out the hope of a gradual return to growth next year.

However, it added that “the outlook remains uncertain”.

The troika said “policy implementation is behind in some areas” and that the Greek authorities have said they will do more to ensure delivery of the fiscal targets for 2013-14, noting in particular efforts to restrict overspending in the health sector.

“In short, it is time to step up the momentum of reform in Greece, support the return of confidence for the sake of sustainable growth and job creation,” said the EU’s monetary affairs commissioner, Olli Rehn.

The troika said the government has also “committed to take steps to bring public administration reforms back on track”, including firing civil servants, one of the measures that has been among the most contentious in Greece’s reform programme.

“Firing civil servants is always difficult, that is difficult in every country, certainly in such economic circumstances,” said Jeroen Dijsselbloem, who is head of the eurogroup meeting and Dutch finance minister.