Economy

Greece receives first tranche of EU bail-out loan

Greek Communist Party supporter holds a flag during a rally in central Athens on Saturday May 15, 2010. The government has imposed deep cuts in wages and pensions and has raised taxes as part of a rescue package agreed with the European Union and the International Monetary Fund to stave off bankruptcy. (AP Photo/Alkis Konstantinidis)

Greek Communist Party supporter holds a flag during a rally in central Athens on Saturday May 15, 2010. The government has imposed deep cuts in wages and pensions and has raised taxes as part of a rescue package agreed with the European Union and the International Monetary Fund to stave off bankruptcy. (AP Photo/Alkis Konstantinidis)   | Photo Credit: Alkis Konstantinidis

Greece received a vital €14.5-billion ($17.9billion) bailout loan from the European Union on Tuesday, officials said, just hours before the country is scheduled to pay a €9-billion bond which matures on Wednesday.

Greece has been battling to avoid default for months while caught in the midst of a recession. At the same time it is trying to rein in debt totalling more than 300 billion euros.

The €14.5-billion loan instalment from the European Union is part of a larger €110-billion package from the EU and the International Monetary Fund.

Athens has said it could not pay off its maturing debt without the emergency loans and that the rescue package is vital for Greece to avoid defaulting on its debt and plunging the shared euro into crisis.

Greece drew the first package funds from the IMF, totalling 5.5 billion euros, last week. The next tranche of funds from the IMF and the EU will arrive in August.

In exchange for the loans, the Socialist government under the leadership of George Papandreou has had to pass a series of austerity measures — which include salary rollbacks, pension cuts and consumer tax hikes — and cracking down on corruption and tax evasion.

In what is seen as a blow to the credibility of Papandreou’s government, Greece’s tourism minister resigned on Monday after tax officials said her husband, a popular singer, owed the government more than 5 million euros in unpaid taxes.

Tourism Minister Angela Gerekou handed in her resignation hours after press reports, which were later confirmed by the Finance Ministry, revealed her husband, Tolis Voskopoulos, faces criminal prosecution for unpaid taxes and fines.

Economists have expressed concern that the Greek economy may plunge even deeper into recession due to its drastic belt-tightening measures.

The debt crisis and subsequent public spending cuts and tax hikes have sparked protests and riots in Greece, leaving three people dead when a bank was firebombed earlier this month.

European Union policymakers and investors are closely monitoring public reaction amid concerns that large scale social unrest could prevent the government from pushing through the measures.

The austerity programme has put the government up against the country’s largest unions, which have so far staged three strikes in protest and are planning a fourth on May 20.

The latest walkout is expected to disrupt sea and rail travel, and shut down ministries across the country.

A poll published on Sunday in the Ethnocs newspaper found that more than half of the Greeks — 58.8 per cent — believe their country will be able to avoid going bankrupt, while 36.6 per cent considered default inevitable.

Of the 1,028 people polled, 56.2 per cent considered the austerity measures to be necessary. However, 87.8 per cent judged them to be unfair.

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Printable version | May 29, 2020 6:14:30 AM | https://www.thehindu.com/business/Economy/Greece-receives-first-tranche-of-EU-bail-out-loan/article16301724.ece

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