Germany came forward to say it, too, would stop contributing, if the International Monetary Fund did.
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Financial markets welcomed the agreement.
Greece’s 10-year government bond yield fell to a six-month low of 7.09 percent and 2-year yields slid below 7 percent.
The hugely unpopular moves with the Greek public went a long way to convince the country’s creditors that Athens might be finally getting serious about undertaking hard reforms and smoothed the way for today’s agreement. Greece’s labour unions staged a general strike to protest against controversial government plans to overhaul pensions and increase taxes to meet demands of its bailout creditors.
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.
Athens has long complained that austerity and reform measures demanded by its global creditors since its first bailout in 2010 have only deepened its long recession.
“Now, it’s their turn”, said Greek Prime Minister Alexis Tsipras.
Almost all of the austerity conditions that Greece had to meet to get its hands on the next loan have been delivered, paving the way for finance ministers to approve the release of the latest aid installment.
They also set out a “possible” second set of measures which would be implemented at the end of the bailout programme in 2018, based on a debt sustainability analysis. The refusal of Germany to do that led to months of wrangling with the International Monetary Fund in which Athens was a frustrated spectator.
The bailout rewards Athens for meeting the terms of its €86-billion bailout programme agreed last July.
Signs of tensions then surfaced at a Wednesday news conference, as IMF European department director Poul Thomsen noted that the organization wasn’t fully on board with the new deal, hinting that its future role as a creditor wasn’t confirmed.
While IMF staff have said they will recommend its board approves the programme, the issue of whether the fund will contribute to the third bailout is still uncertain.
“We welcome that it is understood that Greece needs debt relief to make it sustainable”.
“This is something that I couldn’t have dreamed of a month ago”, he said.
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Going into the talks between 19 eurozone finance ministers in Brussels, Valdis Dombrovskis, the European commissioner in charge of the euro, said he hoped to see “an agreement in principle”, including on disbursement of bailout funds. The bailout cash will be released in tranches, with over €7.5 billion ($8.4bn) to be allocated in June, and another payment expected sometime in the fall.
