By Andrew Jay Rosenbaum
ANKARA
Greece on Thursday is preparing to disburse the first bailout payment of €23 billion ($25.6 billion).
Athens will use the aid funds for budgetary expenditures, arrears clearance, the build-up of cash buffers, debt servicing, and banking sector recapitalization, according to the Luxembourg-based European Financial Stability Mechanism, which officially made the funds available Wednesday.
The first €10 billion ($11.1 billion) will go directly to recapitalizing Greek banks. Another €13 billion ($19.6 billion) will repay the 3.2 billion ($3.5 billion) due to the European Central Bank on August 20, and a bridging loan of €7.16 billion ($10.8 billion) will be paid, which the EU had awarded the Greek government in July to repay loans from the European Central Bank and the International Monetary Fund.
The payment to the European Central Bank was completed Thursday, the bank said in a statement.
An additional €3 billion will be provided in September, which will be used at the discretion of the Greek government, which has, as yet, made no statement about how it will spend the money.
The funding comes with the express condition that the Greek government will continue to enact a series of far-reaching economic reforms.
"The countries in the eurozone have mandated the ESM to make to a maximum of €86 billion [$95.5 billion] available to finance Greece," Eurogroup head Jeroen Dijsselbloem told the press after the announcement Wednesday.
"The program for the coming three years goes with strict conditions which are intended to reform public finances and administration and to stimulate the economy."
Remaining reforms, according to the Memorandum of Understanding between Greece and its creditors, include pension reforms, product market reforms -- Sunday trade, sales periods, pharmacy ownership, milk and bakeries, over-the-counter pharmaceutical products, the opening of closed professions.
Reforms must also be made for the labor market, including modernisation of collective bargaining, industrial actions, and collective dismissals. Labor market policies should be aligned with international and European best practice.
Then, a whole series of privatizations must be put through, with the object of creating a €50 billion ($55.6 billion) investment fund. Part of that fund will again be used for bank recapitalization, and part for investment in key sectors of the country's economy.
German airport operator Fraport has already agreed to pay €1.2 billion euros ($1.3 billion) for a 40-year concession to manage 14 regional Greek airports -- the first sale under the privatization measures.
The bailout was approved by both the German and the Dutch parliaments Wednesday. But there was considerable resistance in each parliament to the proposal.
In the Hague, the government was attacked on the proposal by far-right lawmaker Geert Wilders. "Today we are here to prevent Dutch PM Rutte from indulging in his favorite hobby: sending money to Greece," Wilders said. But the proposal passed by a large majority.
In Berlin, after three hours of lively debate, 453 MPs voted in favour of the rescue package, 113 voted against it and 18 MPs abstained. Despite the adoption by a large majority, about 60 MPs from the ruling coalition lead Christian Democrat party rebelled, and voted against the party line.
Much opposition in the German parliament was generated by concern about the IMF's participation in the bailout. The fund has delayed a decision on taking part in the bailout until September. The IMF is seeking to have debt restructuring for Greece made part of the bailout conditions.
