BRUSSELS, August 19. /TASS/. The Board of Governors of the European Stability Mechanism (ESM) approved the ESM Managing Director’s proposal for a Financial Assistance Facility Agreement (FFA) with Greece in the amount up to 86 bln euro, the ESM said in its official statement on Wednesday.
"The ESM will provide up to €86 billion in financial assistance to Greece over three years," the document said.
"The ESM funds will be used for budgetary expenditures, arrears clearance and the build-up of cash buffers, debt service, and banking sector recapitalization," the document said. "The precise amount of financial assistance from the ESM will depend on the International Monetary Fund’s (IMF) decision regarding the extent of its participation in financing the programme. The IMF will take this decision following the completion of the first programme review," the ESM Board of Governors said.
The total amount of financial assistance will also depend "on Greece’s success in implementing policy reforms, which are designed to ensure that Greece returns to market financing," the document said. Privatization proceeds may additionally reduce the amount of financial assistance needed.
According to information available the first tranche within the third aid program framework will total €26 bln. Funds will be transferred by October and the first installment of €13 bln may be paid already on Wednesday. The decision on them was already made by the European Group at the extraordinary meeting on August 14.
"The ESM Board of Governors has approved a programme that will allow Greece to turn the tide and follow the success of other euro area Member States [Ireland, Portugal, and Cyprus] that have benefitted from ESM support," ESM Managing Director Klaus Regling said. "Pension and tax reforms, structural reforms to stimulate growth and investment, a strengthened privatisation programme, as well as measures designed to make public administration more efficient" will be required from Greece to implement the program, Regling said. "The ESM will make these reforms possible by ensuring financing for the Greek government," he added.
"This agreement [between Greece and lenders] provides perspective for the Greek economy and a basis for sustainable growth. The Greek government is bound to implementing this wide-ranging reform package with determination and we will monitor the process closely," Chairperson of the ESM Board of Governors Jeroen Dijsselbloem said.