Greek Reforms Get Positive Reviews but Second Tranche Postponed to Late October

Euro zone finance ministers gave Greece a positive review of its reforms on Monday but divided up the latest tranche of aid to Athens, disbursing a 1.1 billion euro loan but postponing its decision on a further 1.7 billion payout to later in October.

As part of an 86 billion euro bailout program agreed last year with other euro zone members, the third such package since 2010, Greece needs to complete a wide range of reforms on pensions and labor markets, carry out privatizations and tackle other sensitive issues.

Euro zone countries have so far disbursed 33.5 billion euros under the third bailout and were expected to release a further tranche of 2.8 billion euros to conclude the first review of the aid program.

But in a meeting in Luxembourg on Monday, euro zone finance ministers decided to split the payment in two parts and gave their political green light only to a 1.1 billion euros payment.

The release of the remaining 1.7 billion euros will depend on data on arrears payments for September that the Greek authorities are in the process of collecting.

“It takes time,” to collect this data, the chairman of the Eurogroup of euro zone finance ministers Jeroen Dijsselbloem told a news conference after the meeting.

But he added that “we are fully confident that it will be fine.”

The actual disbursement of the 1.1 billion euro sub-tranche will be finalized in two weeks, on Oct. 24 or 25, when the board of directors of the euro zone bailout fund, the European Stability Mechanism, is to meet.

“We could do it earlier but there is no need to do it earlier,” ESM head Klaus Regling told the news conference.

via CNBC

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza