Germany blocks disbursement of last tranche

Berlin on Thursday blocked the disbursement of the last bailout installment to Greece, worth 15 billion euros, due to Athens extending the value-added tax discount on five Greek islands without securing the approval of its creditors first. Greek banks are also losing access to cheap liquidity through the European Central Bank's waiver on Greek government bonds, while the country is losing the chance to participate in the ECB bond-buying program.

For the tranche to be unblocked by early August, Finance Minister Euclid Tsakalotos pledged at yesterday's Eurogroup that the measure to retain the 30 percent VAT discount on Lesvos, Chios, Samos, Leros and Kos will end in January 2019, and that the loss of 28 million euros of revenues will be offset from other sources. The amount may not seem significant, but the German government was eager to send a message to Athens that it will...