EU approves $7.8 billion short-term loan to Greece

The EU approved a short-term loan of USD 7.8 billion to Greece allowing it to meet a huge payment to the ECB and repay the IMF while a new bailout is still being ratified, the EU’s top official for the euro said on Friday.“We have an agreement on bridge financing.... This agreement is backed by the 28 member states,” Commission Vice President Valdis Dombrovskis told reporters.

Greece must pay the European Central Bank a huge debt payment of 4.2 billion euros as early as Monday, and is in arrears to the IMF.The bridging loan allows Greece to clear its debt to the IMF and to repay the ECB while the modalities of a fresh bailout, agreed in principal by European leaders on Monday, is still under negotiation.

The loan will be given through the EFSM, a rescue fund set up at the time of Greece’s first bailout in 2010 but involves the whole of the 28-nation EU, not just the 19 eurozone members.