Late on Tuesday night and into Wednesday morning, over almost 12 hours of talks, representatives from Greece, the International Monetary Fund, and the Eurogroup agreed upon a series of loose measures to help restructure Greek debt when the country’s bailout deal concludes in 2018.
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“We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance program, .This is stretching what I thought would have been possible not so long ago,”Eurogroup president Jeroen Dijsselbloem told a press conference”.
Greek borrowing costs hit a six-month low on Wednesday and the cost of insuring its bonds against default was the cheapest in 18 months after euro zone finance ministers unlocked new funds for Athens and gave it a firm offer of debt relief.
Socialist French Financing Minister Michel Sapin heaped appreciation on Tsipras for pushing uncomfortable reforms through parliament in order to open a first tranche of new cash worth 7.5 billion euros next month, with another 2.8 billion to come.
Yes. Greece rocked global markets a year ago when it voted in an anti-austerity government determined to rip up the terms of its bailout agreements with other euro-area nations and the International Monetary Fund.
While some debt relief measures were agreed to, the International Monetary Fund appears to have been forced to back down from its insistence that Greece needs “upfront” and “unconditional” relief from its colossal €321bn in debts.
“I think it’s a good result in that we’ve taken a step forward and decided on an easing of the debts, about the time for Greece”.
Slovakian Finance Minister Peter Kazimir warned the meeting “is not going to be an easy one”. He also said that the extent of debt relief was still not clear.
The IMF believes that Greek public debt at the current level of about 180 percent of gross domestic product is unsustainable and must be reduced.
“A number of these reforms do suggest that the near-term impact is going to be worse for the Greek economy”, Erlam said, referring to an increase in the value-added tax, which may impact tourism, a major economic driver for Greece.
The IMF said that without restructuring the debt load could soar to as much as 250 percent of output by 2060.
He said debt measures would be phased in “progressively”.
While the IMF’s board still needs to approve the deal, and the IMF’s participation, it seems that the Washington based organization has basically waved the white flag.
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“However, with little debt relief offered upfront, the Greek government may find it progressively more hard to continue with politically controversial measures required to meet ambitious program commitments”.
