• European Stability Mechanism (ESM)
• Spain – Programme overview
• Cyprus – Programme overview
• Greece – Programme overview

European Stability Mechanism (ESM)

The ESM was established by international treaty as an international financial institution. As a permanent Emergency Financing Mechanism, it replaced the temporary European Financial Stability Facility (EFSF). The ESM has capital stock totalling approximately €704.8 billion. This sum is made up of roughly €80.5 billion in paid-in capital and roughly €624.3 billion in callable capital. Each member state’s financing share in the ESM is based on its contribution to the European Central Bank’s capital, with fixed-term transitional provisions for some new member states.

Germany contributes roughly 27.0% of ESM financing. This can be broken down into roughly €21.7 billion of paid-in capital and roughly €168.3 billion of callable capital. Unlike in the case of the EFSF, Germany does not offer guarantees for the ESM’s financing operations. As set out in Annex II to the ESM Treaty, Germany’s liability risk in connection with the ESM is limited to a total of approximately €190.0 billion under all circumstances.

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Spain – Programme overview

On 25 June 2012, Spain applied for financial assistance from the euro area member states to support its banks. The German Bundestag approved the programme for Spain at a special session on 19 July 2012. On 20 July 2012, the Eurogroup approved the bank programme. An 18-month programme with a maximum volume of €100 billion was agreed. After the European Commission and ECB’s implementation reports confirmed that the programme’s conditions were being met on schedule, a total of €41.3 billion were disbursed in the form of ESM notes to FROB, the Spanish bank recapitalisation fund (Fondo de Reestructuración Ordenada Bancaria). The programme for Spain ended on 23 January 2014. The amount disbursed was below the €100 billion limit.

The loans granted to Spain have an average term of 12.5 years. Spain must repay these loans in full between 2022 and 2027.

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Cyprus – Programme overview

Cyprus submitted a request for financial assistance from the EU in June 2012. On 15 and 24 March 2013, the Eurogroup agreed on the key elements of an assistance programme. The German Bundestag approved the programme for Cyprus on 18 April 2013, with conditionality covering the following key elements:

1. Securing the stability of the financial sector
2. Fiscal consolidation
3. Structural reforms to enhance competitiveness and growth

In return for this, loans of up to €10 billion were committed to Cyprus, up to €9.0 billion from the ESM and SDR ¹ 0.9 billion from the IMF. The IMF programme for Cyprus ended on 7 March 2016. Approximately SDR¹ 0.1 billion were not disbursed. The ESM programme for Cyprus ended on 31 March 2016. In total, approximately €6.3 billion of ESM funds were disbursed.

The ESM loans granted to Cyprus have an average term of 14.9 years. Cyprus must repay these loans in full between 2025 and 2031.

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Greece – Programme overview

Greece applied for financial assistance from the ESM on 8 July 2015, following the expiry of the second macroeconomic adjustment programme on 30 June 2015. On 12 July 2015, the heads of state or government of the euro area countries agreed on minimum requirements for financial assistance. Greece could receive loans of up to €86 billion if it met certain conditions. On 1 August 2018, the German Bundestag released the fifth and final programme tranche, totalling €15.0 billion (€5.5 billion for debt servicing and €9.5 billion to build up a liquidity buffer). In total, €61.9 billion were disbursed to Greece under the third assistance programme. The third assistance programme for Greece ended on 20 August 2018.

The loans granted to Greece have an average term of 32.4 years. Greece must repay these loans in full between 2034 and 2060.