Greece is now set to receive €7.5 billion in an emergency bailout loan so that it can meet its repayment on part of another loan.
Greece will now be able to use the injection to pay €3.5bn to the European Central Bank next month in debt repayments and not have to default.
Another large sum will go to honouring government arrears. It has been reported that the money will be of little help to the real economy as there will be very little left for investment or to aid the country’s welfare system.
Greece is in its seventh year of recession and GDP is down more than 25% since the beginning of the crisis. The country is indebted by €320 billion.
It took months to reach a deal in which Greece would be granted its third bailout, this time for €86 billion. The €7.5 billion package is the first payment Greece has had since 2015 and comes after eurozone lenders said they believed Greece had made sufficient policy progress to warrant the disbursement.
The Tsipras government has had to introduce yet more spending cuts and tax hikes to qualify for the loans, despite having been elected on an anti-austerity ticket. The full whack of fresh austerity is not likely to sit well with the beleaguered population
Athens still has to face a second more challenging review if it is to receive further tranches. Deeper labour reform and other controversial measures are likely to fan popular unrest.
Moreover, Athens has been commanded to achieve a budget surplus of 3.5% of GDP by 2018. Anyone taking bets on the likelihood that this can be achieved by a country pretty much on its knees?
