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article imageEU withholds part of Greece's bailout loan

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By Katerina Nikolas     May 10, 2012 in World
Part of an agreed EU bailout loan to Greece that was due to be paid on May 10 has been withheld, as uncertainty regarding a new government grips the country.
The European Financial Stability Facility (EFSF) paid €4.2 billion of an agreed €5.2 billion loan, as it released a statement saying the remaining €1 billion would be paid later "depending on the financing needs of Greece." (Athens News).
The portion of the loan paid on Thursday will go directly into a special account to service the interest on the country's debts.
The Telegraph reported that Klaus Regling, chief executive of the EFSF, said no further funds will be advanced to Greece until the Troika has conducted an inspection. He said, "there has to be a new Troika visit and an agreement on what happens on the second half of the year and next year, so there will be no further disbursement before there is an agreement with the Troika."
This is not the first time that bailout loans have been withheld from Greece. In November 2011 the BBC reported that €8 billion was to be withheld after then Prime Minister George Papandreou announced Greece would hold a referendum. No such referendum was held, but the suggestion cost Papandreou his political position.
Although Greece has implemented EU-directed austerity measures in return for loans, it is due to make a further tranche of pay cuts and pension cuts in June, in addition to raising taxes further. As attempts by the party leaders who gained the most seats in Sunday's elections have so far failed to cobble together a working coalition government, Greece's creditors are faced with the uncertain prospect of necessary economies being implemented in June.
article:324598:11::0
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