NEWS

Hopes raised for deal on Greek debt at Eurogroup

Greece was waiting to hear on Tuesday night if eurozone finance ministers were prepared to give the green light for the release of its next bailout tranche and whether they were able to bridge differences with the International Monetary Fund over how to make the country's debt sustainable.

IMF managing director Christine Lagarde and a number of ministers attending the Eurogroup in Brussels appeared hopeful that all the loose ends would be tied up.

“We’re here to work very constructively to see if we can find a solution for Greece,” Lagarde told reporters.

“There are good chances that we will come to a conclusive mutual solution, but I can’t be entirely sure,” said Eurogroup chief Jean-Claude Juncker. “It’s clear that Greece has delivered.”

The meeting was expected to lead to the release of Greece's next loan tranche in the coming days. According to a schedule seen by Reuters, proposals on providing additional funding to cover the two-year extension to Greece's fiscal adjustment and on reducing the country's debt would be put before national parliaments with the aim of them being voted on by the end of the month.

A new Eurogroup on December 3 would then approve disbursement, which would take place on December 5 after Greece and the troika had a signed a new memorandum of understanding a day earlier.

It remained to be seen of the eurozone and IMF could settle their dispute over how to bring Greek debt down to 120 percent of GDP from the 190 percent it is expected to reach next year.

The IMF wants to stick to the original deadline of 2020 for reaching this target, while the eurozone has suggested it should be moved to 2022.

"It is essential that we decide on a set of credible measures on reducing the debt burden of Greece tonight,” said EU Economic and Monetary Affairs Commissioner Olli Rehn.

“Furthermore, we should be ready in the coming years to take further decisions, if needed, in order to ensure there is sufficient debt sustainability in Greece,» Rehn added, without elaborating on what form this reduction might take.

Germany, and several other eurozone countries, have so far ruled out the possibility of a haircut on bilateral loans to Greece.

"I have the impression that a political agreement is within reach and I think it is our duty as finance ministers to get it this evening,” said French Finance Minister Pierre Moscovici. “Everyone has to accept that they will have to go beyond their red lines."

Online