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August 19, 2010    

Greece will receive second instalment of rescue loan

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by Kay Murchie
Greece will receive second instalment of rescue loan

The European Union has today announced that Greece has met the conditions of its loan and will therefore receive the second instalment of its bailout loan on 13 September.

In May, the EU and the IMF agreed to loan €110 billion. The three-year rescue deal comprises €80 billion from the EU, with the rest coming from the IMF.

Earlier this month, the International Monetary Fund (IMF) and European Union (EU) auditors said Greece has made “considerable progress” in dealing with its public deficit and was “confident” Greece would receive the next instalment of the loan.

For many months now, Greece has been making big cuts to public spending in an attempt to cut its deficit.

The European Commission has reported that Greece has cut its deficit “faster than planned” - by around 46%, with a reduction of public spending around 16.9% in comparison to the first half of 2009.

However, the tough austerity measures, introduced by the Government, have had a major impact on economic growth.

Last week, Greece’s statistics agency, Elstat, said the economy contracted by a further 1.5% in the April to June quarter – suggesting the country’s recession is far worse than originally anticipated.

The fall follows the 0.8% decline in growth in the first quarter.

Meanwhile, euro zone finance ministers will meet on 7 September to approve the payment of the €9 billion due to Greece next month.

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