“This can be the beginning of turning Greece’s vicious circle of recession measures into one where investors have a clear runway to invest in Greece and turn the corner in favour of the virtuous cycle”, he said.
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This review was the first under Greece’s third eurozone bailout, secured in August past year, after which Prime Minister Alexis Tsipras called a snap election.
The deal also includes the prospect of debt relief for Athens in the form of lower interest rates and an extension on loan repayment deadlines if it is needed in the future.
Holding the view that Athens has done enough reforms, Germany argued that Greece could meet its austerity targets and stands strongly against any debt relief for Athens. Crucially, the debt relief agreement will keep the Fund in the Greek bailout program.
Acknowledging the “political capital” European ministers invested to reach the deal, Dijsselbloem called it a “new phase” in a six-year drama to stabilise Greece’s finances that had taken the euro zone to the brink of break-up.
“The Eurogroup agrees to assess debt sustainability with reference to the following benchmark for gross financing needs (GFN): under the baseline scenario, GFN should remain below 15% of GDP during the post programme period for the medium term, and below 20% of GDP thereafter”.
“The Eurogroup agreed today on a package of debt measures which will be phased in progressively”, said Dijsselbloem, adding that he was “glad to confirm” the International Monetary Fund would now stay on board.
“It’s made considerable efforts, and again this weekend”, said French Finance Minister Michel Sapin, referring to the reforms Greece passed.
In April, 2016, IMF Director Christine Lagarde had said the lender would reconsider its participation if Europe didn’t contribute. Some euro-zone 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.
Greece’s parliament passed a bill over the weekend providing for tax hikes, more budget-cutting reforms and a new privatization superfund, which will manage nearly all state property.
The European plan involves using 25 billion euros from the third bailout’s 86 billion euros to pay off early the bilateral loans to Greece (GLF) from the first bailout in 2010.
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Greece’s Finance Minister Eucleidis Tsakalotos waits for the start of a meeting of European Union finance ministers in Brussels on Wednesday, May 25, 2016. After rising initially, the main stock index in Athens was down 1.2 percent in late afternoon trading.
