Eurozone finance ministers say they have reached a “major breakthrough” in negotiating the latest debt relief deal for Greece after hours of discussion in Brussels Tuesday night.
Advertisement
The euro zone offered Greece its firmest offer yet of debt relief in exactly what finance ministers called a development deal that won a dedication from the International Monetary Fund finally to return to taking part in the bailout for Athens.
Greece is determined to unlock an estimated 10.3 billion euros ($12 billion) at the Eurogroup talks, the windfall for completing the first formal review of its 86 billion euro bailout programme agreed last July.
The IMF insists that Greece needs “upfront” and “unconditional” debt relief, saying in an assessment on Monday that Greece can not meet the terms of the bailout program and that interest payments on the soaring national debt would eat up 60 percent of the budget by 2060 without debt forgiveness. Funds are also needed to prop up everyday government spending and public sector wages.
The government, led by the leftist Syriza coalition, agreed to a third bailout worth 86 billion euros ($96 billion) previous year.
But the hardest part of the talks will be the effort to diffuse the row between Greece’s creditors, the eurozone governments and the International Monetary Fund, over the state of the Greek economy and debt relief.
The move came two days after the Greek parliament approved another round of spending cuts and tax increases demanded by its worldwide creditors.
“An actual haircut of the loans will not happen”, Dijsselboem said. Based on periodic “debt sustainability analysis”, the creditors will take progressively increasing number of technical measures to ensure that Greece will not be overwhelmed by its debt payment obligations.
“That we are not doing because we still need to have that conversation on debt issues”. The programme was criticised by analysts and commentators, however, as a “missed opportunity” since concrete details on debt relief were absent. Some euro-area nations including Germany and the Netherlands, which have elections next year, had resisted the restructuring measures as they are restrained by domestic electorates that have grown tired of helping the Greeks.
Eurozone finance ministers also agreed on debt relief for Greece, extending the repayment period and capping interest rates.
Greece’s finance minister Euclid Tsakalotos said he saw “some ground for optimism” to turn Greece’s fortunes around and attract investment.
Mutual trust was returning to the talks, he said, almost a year after Tsipras’s rejection of austerity measures pushed Athens close to be pushed out of the euro.
The IMF considers debt relief essential, but Germany in particular was opposed.
Advertisement
On Twitter, EU president Donald Tusk described the deal as “a strong message of stability for Greece, Europe and the global economy”.
