Greece Could Ask for as Much as 24 Billion Euros

Greece might seek up to as much as 24 billion euros for its first tranche of new bailout aid from its international lenders during August to help prop hits banks up and repay its debts that are coming due at the European Central Bank, said a newspaper in Greece that is pro-government in its early editions on Sunday.

Athens is currently in negotiations with the International Monetary Fund and the European Commission to secure as much as 86 billion euros for its bailout. This will be the country’s third bailout in the past five years.

Avgi newspaper, a daily that is close to Syriza the leftist government in Greece, said authorities in the country expected to end talks with their lenders sometime in mid-August.

The first tranche of over 24.35 billon euros would go to make an initial recapitalization of 10 billion euros to the banks in Greece, 7.15 billion to repay a bridge loan, 3.2 billion toward some Greek bonds held by the ECB and for other payments, said the newspaper.

It was estimated that the banks in Greece require as much as 25 billion euros to be fully recapitalized, a shortfall that was exacerbated by a huge outflow of the bank’s deposits when lenders reached a stalemate with Athens lawmakers.

The exit of money from Greece culminated in lawmakers imposing capital controls starting June 29, to prevent any financial meltdown.

In exchange for new funding the government of Greece accepted new reforms including significant adjustments to pensions, increasing value added tax, overhauling the collective bargaining system, limit public spending and liberalize the economy.

If the ongoing talks do not finish in time, authorities from Europe might have to provide even further temporary financing as was done with a bridge loan in July, though the Greek newspaper said the kind of possibility was not discussed by Greek’s lenders.

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