Malta to make €30 million loan available to Greece

Malta, together with the other member states of the eurozone will be contributing towards a €30 billion loan to be made available to Greece if the country doesn't manage to borrow the money needed to cover its debts from the international markets.

Although the Finance Minister yesterday did not want to divulge the amount to be available by Malta in case Greece asks for the money, sources close to the Central Bank revealed to The Times Business that Malta will be contributing some €30 million to the eurozone's loan-kitty of €30 billion.

Asked to state what will be Malta's contribution, a spokesman for the Finance Ministry refused to give this information stating that "at the moment there is nothing to add to the statement made by the eurozone earlier on this week."

Central Bank sources, however, said member states' contributions will be based on what national central banks pay into the European Central Bank in Frankfurt, meaning that Germany, France, Italy and Spain will shoulder the biggest burden, while Malta, Cyprus and Luxembourg will pay the least.

"Malta's share will be some €30 million," the sources said.

Greece's 15 eurozone partners have said they are able call up €30 billion this year to lend the debt-plagued Mediterranean state should it be unable to get financing from the markets. The International Monetary Fund will pay out around a third of the total package - the EU's €30 billion making up the other two-thirds - which means an extra €10-15 billion could be added to the pot. The IMF has yet to confirm its contribution.

The decision was made at an emergency teleconference of eurozone finance ministers last Sunday, three weeks after the 15 EU leaders agreed the outline of the package and said they were ready to let the Washington-based IMF in on the deal.

"This is a step of clarification the markets have been waiting for," said Eurogroup head and Luxembourg's Prime Minister Jean-Claude Juncker.

"It shows that there is money behind this."

All eurozone member states - even over-indebted Ireland, Spain, Portugal and Italy - will contribute to the pool of loans.

So far it is not yet clear exactly what would trigger a request for aid but the European Central Bank and the European Commission will have to assess Greece's needs on the back of any demand, and can say no if they feel the country has not exhausted all its options on the market.

All 15 countries participating will charge an interest rate of five per cent to Greece, well below the seven per cent it currently pays to issue bonds and more than what most governments have to pay themselves, meaning some might even make money on the loans.

The rate will have to be renegotiated if the loan is not called up in the near future, as it is based on Euribor, which is the average rate the top 50 European banks charge to borrow from each other. There will also be charges of up to 3.5 per cent levied on the payout and an extra one per cent if the loan is not paid back within three years.