Greece Reaches Deal with European Lenders for Bailout Installment
- Author: Zachary Reyes Jun 20, 2017,
Jun 20, 2017, 15:38
There is now "light at the end of the tunnel", he said. In essence, that could mean payments could be postponed in the event of an adverse shock.
To bridge the wide differences in assumptions on Greek growth for the next decades, France proposed to link the size of the debt relief with Greek economic growth and euro zone ministers said they would work on that idea further.
Furthermore, the Eurogroup chose to extend maturities for the country's loan payments by up to 15 years, if necessary. In addition, he said Greece's growth levels could be taken into account in its repayments.
As a result, the main point of interest of Thursday's meeting of eurozone finance ministers is on the debt relief discussions.
Under the terms of its 2015 bailout, Greece's European creditors had promised to provide cash and find a way to lighten the country's long-term debt load - as long as the government kept a lid on spending and deeply reformed the Greek economy.
The Eurogroup has welcomed reforms adopted by Greece's parliament - covering areas such as pensions, income tax, the labour market as well as the financial and energy sectors.
Moscovici expressed his hope that the "spirit" was there for Greece's relations with its creditors to move to a "new phase".
It will give confidence to creditors to disburse to Greece under the ESM program in July-thus reducing a potentially serious stress on the Greek economy-and it will give confidence to investors on the prospects for the Greek economy to grow and its people to prosper. It needs to be a "success", he added.
Gianni Pittella, head of the Socialists in the European body, told Die Welt newspaper that it was unfair to hold Greece hostage, and said it was time to come toward Athens after years of enduring harsh reforms.
Greece needed the money to meet seven billion euros of debt repayments due in July.
The Greek government, whose popularity has fallen sharply as it imposed more austerity measures, faced more criticism on Thursday when more than 2,000 older protesters marched through Athens to demonstrate against pension cuts.
"We can't live on 300 euros" they chanted, with some waving sticks.
Greek Prime Minister Alexis Tsipras has repeatedly said that debt relief is necessary to get the Greek economy back on track. It still wants the euro zone to offer sufficient extra detail on possible debt relief in 2018 to let the Fund calculate that it will be enough for Athens to sustain its debt in the long run.
European Union officials have said Greece shouldn't rely on participating in the ECB's quantitative easing program given that it was never a certainty and have pointed out that very few of its bonds are eligible for inclusion. "This is a second-best solution, but it's not a bad solution", said Lagarde, a former French finance minister.