Greece gets enough to avoid another bailout trauma
- Author: Zachary Reyes Jun 17, 2017,
Jun 17, 2017, 22:07
"I am pleased to announce we have achieved an agreement on all elements", said Eurogroup head Jeroen Dijsselbloem. Macron wants to work with Germany to strengthen the 18-year-old common currency, which was almost wrecked by the sovereign debt crisis. Greek Finance Minister Euclid Tsakalotos, left, speaks with Italian Finance Minister Pier Carlo Padoan during a meeting at the office of the European Stability Mechanism in Luxembourg on Thursday, June 15, 2017.
"The bottom line is that, although default was averted, no measures were taken that would create a path leading Greece to financial markets", said economics professor Nicholas Economides at the Stern School of Business, New York University.
The European Union's top economy official says it's time for the Greek people to see the "light at the end of the tunnel of austerity".
The accord, reached by euro-area finance ministers in Luxembourg Thursday, will cap Greece's gross financing needs at 15 percent of gross domestic product for the medium term and at 20 percent thereafter, while extending maturities and deferring the interest payments on some bailout loans by as much as 15 years.
Many voices, especially in emerging markets, have criticized this exemption, which they said gave preferential treatment to rich European countries, leeway they never allowed to emerging and developing countries, which had to agree to harsh reforms and tough oversight to receive loans.
"I'm much happier today than I was a week ago", Greek Finance Minister Euclid Tsakalotos said after the meeting.
"If growth is better than expected, Greece will be able to accelerate its repayments".
On Thursday, the IMF agreed to offer Athens a standby arrangement of less than $2 billion but won't be disbursing any of the funds until euro zone countries offer more detail on potential debt relief measures in 2018, Reuters reported. Greek Finance Minister Euclid Tsakalotos, center, speaks with Italian Finance Minister Pier Carlo Padoan during a meeting at the office of the European Stability Mechanism in Luxembourg on Thursday, June 15, 2017. Euro.
Greece has been promised some form of help on its long-term debt repayments if it delivered wide-ranging economic reforms and kept a tight control on its spending.
Schaeuble also said previous agreements to consider reducing the burden of Greece's debt repayments if the country complies with all conditions remained "the framework" for talks.
On Thursday, more than 2,000 older Greeks marched through Athens to demonstrate against cuts to monthly pensions.
"We don't want the flawless to be the enemy of the good".
"We can't live on 300 euros ($334)!" they chanted, with some waving sticks.
The meeting is set to decide on whether Greece has done enough for the bailout funds to be released and provide more clarity over what sort of debt relief the country can expect when it exits its bailout program next year.
Jeroen Dijsselbloem, the eurozone's top official, said agreement Thursday on support for Greece had been forged "on all elements" - money, debt relief and International Monetary Fund involvement.
After three bailouts, Greece's debt now stands at a staggering 180 per cent of annual output, by far the biggest national debt pile in Europe.
Euclid Tsakalotos, Greece's finance minister, said he is "confident" about the prospects of a deal later.
The office of Prime Minister Alexis Tsipras said in a statement that the decision sends markets a positive message.
In the summer of 2015, the eurozone agreed on a new bailout program for Greece, but it was contingent on International Monetary Fund participation.