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Greece to get bridge loan

July 15, 2015

The European Commission has advocated giving Greece 7 billion euros from an EU-wide crisis fund to cover Athens' short-term financing needs as it waits for a full bailout program to become operational.

Brüssel Europäische Kommission Außenansicht
Image: picture-alliance/dpa/D. Kalker

On Wednesday, the Commission's vice president, Valdis Dombrovskis, said the money could come from the European Financial Stability Mechanism (EFSM), an instrument that allows the EU to borrow up to 60 billion euros ($66 billion) on financial markets.

"This is not an easy option," Dombrovskis told journalists in Brussels, but he added that there were no other obvious solutions.

As European officials have scrambled to find solutions for Greece's immediate cash crunch, a number of EU countries outside the euro have opposed tapping funds like the EFSM because it is backed by all 28 Union members.


Britain's Finance Minister George Osborne has already said that the eurozone has to "foot its own bills" and that the "idea that the British taxpayers are going to be on the line for this Greek deal is a complete non-starter."

But on Wednesday, Dombrovskis said the Commission was in the process of discussing how countries like Britain, Sweden and the Czech Republic could be protected from any potential losses.

This could include using profits the ECB made from holding Greek bonds as collateral in case Athens didn't pay back the EFSM loans. Another idea was waiting until a more permanent bailout deal for Athens kicks in and using money from that to pay back the initial loan.

Greece sealed a deal with its creditors on Monday to begin negotiations on a three-year bailout worth up to 86 billion euros. But before the details for that deal are finalized, Athens will have to make several imminent payments, including 4.2 billion euros owed to the ECB on Monday.

Athens is already in arrears for about 1.6 billion euros to the IMF after missing two payments.

Dombrovskis said the bridging loan would last three months, although the Commission hopes it will only be needed until a full bailout program comes into effect in mid-August.

cjc/ng (AP, Reuters, AFP, dpa)