(MENAFN- Kuwait News Agency (KUNA)) The Board of Governors of the European Stability Mechanism (ESM) approved Wednesday the ESM Managing Director's proposal to provide up to 86 billion euros in financial assistance to Greece over three years.
The Board of Governors, which comprises the 19 euro area finance ministers, also adopted a Memorandum of Understanding (MoU) with Greece, specifying the policy measures that the Greek government has agreed to undertake in order to tackle the main challenges facing its economy, said the ESM in a statement.
The Luxembourg-based ESM has the mandate to preserve financial stability in the euro area by providing financial assistance to member states with severe financing problems. It is a permanent inter-governmental institution, inaugurated on 8 October 2012.
The ESM funds will be used for budgetary expenditures, arrears clearance and the build-up of cash buffers, debt service, and banking sector recapitalization by Greece, noted the statement.
It clarified that the precise amount of financial assistance from the ESM will depend on the International Monetary Fund's (IMF) decision regarding the extent of its participation in financing the Greek programme.
Jeroen Dijsselbloem, Chairperson of the ESM Board of Governors, said: "This agreement provides perspective for the Greek economy and a basis for sustainable growth. The Greek government is bound to implementing this wide-ranging reform package with determination and we will monitor the process closely." Klaus Regling, ESM Managing Director, said: "The ESM Board of Governors has approved a programme that will allow Greece to turn the tide and follow the success of other euro area member states." "The MoU features long-needed pension and tax reforms, structural reforms to stimulate growth and investment, a strengthened privatisation programme, as well as measures designed to make public administration more efficient," he said.
The ESM approval came the same day when the German parliament ratified a proposal from the eurozone to grant Greece a third bailout. 454 German lawmakers voted in favour, 113 against, with 18 abstentions.