Greek bailout gets final okay

The eurozone has formally approved the release of the first installment of the second bailout for Greece.

"Euro area member states have today formally approved the second adjustment program for Greece," the head of the Eurogroup, Luxembourg's Prime Minister Jean-Claude Juncker said in a statement.

The first installment of 39.4 billion euros ($51.5 billion) is to be paid out in a series of tranches. Athens was expected to use the bulk of the funds to recapitalize its banks and to plug its budgetary deficit.

The eurozone finance ministers had agreed to approve the 130-billion euro second Greek bailout during a meeting in Brussels on Monday, however the decision couldn't be made final until some national parliaments ratified the decision.

"All required national and parliamentary procedures have been finalized," Juncker's statement said.

A word of warning

At the same time, though, he warned Athens that it still had to do its homework if it was to turn the corner financially and get on a path to sustainable economic recovery. Greece, he said, needed to maintain a "strong commitment" to "fiscal, consolidation, structural reforms and privatization."

The first set of loans from the second bailout was to come from the temporary European Financial Stability Facility. Later tranches are to come from the European Stability Mechanism (ESM), a permanent firewall worth 500 billion euros, which is to come into force in July.

The ESM moved a small step closer to becoming a reality on Wednesday, when German Chancellor Angela Merkel's cabinet approved its creation. The legislation still has to be approved by parliament, but as Merkel's center-right coalition has a clear majority in the Bundestag, this is regarded as a formality.

pfd/ncy (AFP, dpa)