After the Eurogroup's decision to back the Memorandum of Understanding for a third bailout, several national parliaments (including Germany, Austria, Estonia, Finland, Latvia, Portugal, Spain and France) will need to approve it, either through a plenary session or via a budgetary subcommittee.
The votes are expected to take place on or around 18 August and a positive outcome would enable the ESM Board (effectively the Eurogroup) to adopt the MoU and the loan, and hence proceed to the payment of the first tranche, says Societe Generale. This tranche of up to €26bn will consist of €10bn to cover the first stage of the Greek banks recapitalisation and the remainder would be used to pay Greece's external commitments (a €3.2bn debt repayment to the ECB due on 20 August, €1.5bn to the IMF in September and the €7.2bn EFSM bridge loan) and to reduce central government arrears.
"If, for any reason, the approval is delayed or the funds cannot be disbursed in time for the ECB repayment, another bridge loan would most likely be approved, similar to the one agreed in July. As a result, a default on the ECB loan appears unlikely at this stage. However, a number of risks remain, particularly on the political front", said SocGen in a report on Monday.
