After getting the formal approval on Dec. 14 from the Eurozone finance ministers he was meeting in Brussels for a surge of 52.5 billion euros ($68.6 billion) in a series of more rescue loans over the next few months Greek Prime Minister Antonis Samaras said the country was on its way to getting out from under a crushing economic crisis.
Speaking at a news conference ahead of a European Union leaders’ summit, Samaras said the money would allow the government to recapitalize banks, pay back bills to vendors and citizens of some nine billion euros ($11.77 billion) and keep the economy from further faltering. He said about 40 billion euros ($52.32 billion) would stay in Greece and the other 12.5 billion euros ($15.4 billion) will go toward debt reduction.
“Grexit is dead, Greece is back on its feet,” he told reporters, believing the deal has ended any idea that Greece could be forced to exit the Eurozone. He said it means instead that Greece will “exit the crisis stronger, not on its knees.”
The first 34.3 billion euros ($44.87 billion) will be disbursed immediately, possibly as early as next week, while another 14.8 billion euros ($19.36 billion) will be transferred in installments during the first quarter of next year as long as reform “milestones” are met.
From the first installment, 16 billion euros ($20.94 billion) will go toward bank recapitalization, 7 billion euros ($9.16 billion) for budgetary financing and 11.3 billion ($14.79 billion) to finance the bond buyback program. “Within the next few weeks, we’ll complete the recapitalization of our banks, which will help liquidity and boost job creation, which is the top priority,” said Samaras.
“Some people expected us to be out of the euro and cannot believe that we are staying in,” added the prime minister. “We have restored trust in Greece abroad; now we will restore the dignity of the Greek people,” he added.
The cost to Greeks will be high. To get release of the funds, the government had to ram through Parliament a $17.45 billion spending cut and tax hike plan that imposes more harsh austerity measures on workers, pensioners and the poor while tax evaders will largely continue to escape prosecution.
Another condition was the debt buyback program in which Greece will get back some 30 billion euros ($39.25 billion) in bonds held by investors for only 11.3 billion euros ($14.78 billion) to reduce its debt by 20 billion euros ($26.17 billion.) The cost was 1.3 billion euros higher than expected and it will come from the rescue loans.
The first series of coming loans are part of a second bailout of $173 billion from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB.)
Finance Minister Yiannis Stournaras, who was also at the news conference, said that the decision could ease fears of a Greek default but not end the speculation as Greece is still faced with repaying the loans at the same time austerity measures have worsened its recession and there is little immediate chance of growth or development.
“The threat of a euro exit is beginning to fade after today’s decision,” he said, adding that there was still much work for the government to do. “Those who believed in Greece have been justified but we cannot rest,” said Stournaras. “The journey begins today.”
He emphasized that Greece would have to meet its commitments on structural reforms, starting with the new tax bill, which Stournaras said would be tabled in Parliament immediately and which aims primarily at workers, pensioners and the poor.
He said fellow Eurozone finance ministers showed a keen interest in the draft law, particularly in terms of what measures Greece will take to boost revenues and cut down tax evasion. European officials appeared upbeat on Greece’s prospects. “We are convinced that the program is back on a sound track,” Eurogroup Chairman Jean-Claude Juncker said.
EU Economic and Monetary Affairs Commissioner Olli Rehn said that those who had doubted Greece’s future in the euro had been mistaken. “As we approach the end of this turbulent year, those Cassandras have been proven wrong,” he said.