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The European Commission said on Thursday that Greece has met the conditions to receive the second tranche of EUR 110 billion rescue package. It expects the euro area member states to approve and disburse this second installment.
"Greece has managed impressive budgetary consolidation during the first half of 2010 and has achieved swift progress with major structural reforms," said Economic and Monetary Affairs Commissioner Olli Rehn.
However he noted that challenges and risks remain despite the significant progress made. "The main immediate challenge is to safeguard adequate liquidity and financial stability of the banking sector. At the same time, the structural reform agenda needs to be pressed ahead to unleash the huge potential for raising growth," he stated.
The Commission said Greece's budget deficit declined some 46% in the first half of this year, faster than planned. Total state cash spending was reduced by 16.9% compared to the first half of 2009.
Greece has already received its first tranche worth EUR 20 billion after the International Monetary Fund and the European Union jointly announced the EUR 110 billion rescue package in May this year.
Euro area finance ministers are expected to approve the second tranche of EUR 9 billion, when they meet in Brussels on September 7. The EU will contribute EUR 6.5 billion and the IMF rest EUR 2.5 billion.
The Commission urged Greece to speed up efforts to improve the collection and processing of data which are essential for budgetary control.
Greek recession worsened in the second quarter with economy contracting 1.5%, severe than the 0.8% fall seen in the first quarter.
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