Tuesday September 30, 2014 Search
Weather | Athens
26o C
17o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Eurozone, IMF clinch deal on Greek loan and debt

Eurozone finance ministers have agreed on a formula to reduce Greek debt to 124 percent of GDP by 2020, with Athens having to come under even greater fiscal scrutiny but with the opportunity of seeing its debt reduced even further in the next few years.

The third meeting of the Eurogroup in two weeks produced a result after about 12 hours of talks as the euro area ministers and International Monetary Fund managing director Christine Lagarde agreed on a set of measures that would immediately cut Greece’s debt by 20 percentage points and then set it on a path that would see it drop below 110 percent of GDP by 2022.

The agreement means that Greece will also receive 34.4 billion euros by the end of the year – 23.8 billions is to complete the recapitalization of Greek banks - but the remainder of the bailout loans (9.3 billion euros) it was expecting next month will be paid in three tranches at the beginning of next year.

“This is not about money,” said the head of the Eurogroup, Jean-Claude Juncker, after the meeting.

“This is the promise of a better future for the Greek people and for the euro area as a whole, a break from the era of missed targets and loose implementation towards a new paradigm of steadfast reform momentum, declining debt ratios and a return to growth."

“This was a test for the eurozone and we simply could not afford to fail,” said European Union Economic and Monetary Affairs Commissioner Olli Rehn, who said that further steps to reduce Greek debt would be considered in the future.

“This agreement is possible because Greece has shown it is serious about reforms,” he said. “Greece has come a long way and the Eurogroup has recognized that.

Lagarde also reaffirmed the IMF’s commitment to the Greek program but said that the Washington-based fund would wait until a bond buyback scheme to reduce Greek debt has been carried out before deciding to release its share of bailout funding.

“Once progress has been made on specifying and delivering on the commitments made today, in particular implementation of the debt buybacks, I would be in a position to recommend to the IMF Executive Board the completion of the first review of Greece’s program,” she said.

Prime Minister Antonis Samaras gave a brief statement to journalists in Athens. “Everything went well,” he said. “All Greeks fought together. A new day begins tomorrow for all Greeks.”

Greece’s lenders agreed on a package of measures to reduce Greek debt by 40 billion euros, cutting it to 124 percent of gross domestic product by 2020.

In a significant new pledge, ministers committed themselves to take further steps to lower Greece's debt to “significantly below 110 percent» in 2022 -- the most explicit recognition so far that some write-off of loans may be necessary from 2016, the point when Greece is forecast to reach a primary budget surplus.

“When Greece has achieved, or is about to achieve, a primary surplus and fulfilled all of its conditions, we will, if need be, consider further measures for the reduction of the total debt,” German Finance Minister Wolfgang Schaeuble said.

To reduce Greece's debt pile, ministers agreed to cut the interest rate on official loans, extend their maturity by 15 years to 30 years, and grant Athens a 10-year interest repayment deferral.

They promised to hand back 11 billion euros in profits accruing to their national central banks from European Central Bank purchases of discounted Greek government bonds in the

secondary market.

They also agreed to finance Greece to buy back its own bonds from private investors at what officials said was a target cost of around 35 cents in the euro.

“The initiatives include Greek debt buybacks, return of Securities Market Programme (SMP) profits to Greece, reduction of Greek Loan Facility (GLF) interest rates, significant extension of GLF and European Financial Stability Facility (EFSF) maturities, and the deferral of EFSF interest rate payments,” said Lagarde.

“Taken together, these measures will help to bring back Greece’s debt ratio to a sustainable path and facilitate a gradual return to market financing,” the IMF chief added.

“The debt ratio is expected to decrease to 124 percent of GDP by 2020 through significant upfront debt reduction measures of 20 percent of GDP. In addition, I welcome the commitment by European partners to bring back Greece's debt to substantially below 110 percent of GDP by 2022, conditional on full implementation of the program by Greece. This represents a major debt reduction for Greece relative to its current debt trajectory.”

ekathimerini.com , Tuesday November 27, 2012 (03:55)  
EU must boost air, sea migrant rescues, says Amnesty International
Commissioner-designate Avramopoulos to face three-hour interview on EU´s migration portfolio
Roma camp off Mesogeion Avenue set for demolition amid reactions
Death of nurse at ‘violent’ hostel to be investigated
EU gives more aid to farmers hurt by Russia sanctions
The European Union introduced a new aid package on Tuesday worth 165 million euros to help farmers hit by Russian sanctions over the Ukraine crisis, but tightened up on dubious compensation ...
Greeks ruled ship market in August
Greek shipowners accounted for 30 percent of all ship acquisitions in the world in August, as they bought 23 vessels with a total capacity of 2.14 million deadweight tons and a total value o...
Inside Business
SOCCER
All team sports suspended next weekend in memory of dead fan
The government announced on Monday the suspension of all team sports events in Greece scheduled for next weekend, October 4 and 5, in the memory of the Ethnikos Piraeus fan who died a few ho...
SOCCER
Karamanos punishes Michel for deeming him surplus
Atromitos forced Olympiakos’s first loss this season in all competitions on Saturday to allow PAOK to go alone on top of the Super League table on Sunday. Odds-on title favorite Olympiakos l...
Inside Sports
COMMENTARY
Next-day jitters
It is usual for Greek governments, whether one-party or coalitions (which are normally loath to actually work together), to claim that their only real challenge is dealing with the country’s...
EDITORIAL
No sweet debt deals
The lion’s share of Greece’s debt is held by European Union member states and the International Monetary Fund. A writedown of the European part of the debt would require the approval of the ...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. EU must boost air, sea migrant rescues, says Amnesty International
2. EU gives more aid to farmers hurt by Russia sanctions
3. Commissioner-designate Avramopoulos to face three-hour interview on EU´s migration portfolio
4. Roma camp off Mesogeion Avenue set for demolition amid reactions
5. Greeks ruled ship market in August
6. Nine properties to be auctioned next week
more news
Today
This Week
1. Roma camp off Mesogeion Avenue set for demolition amid reactions
2. Next-day jitters
3. No sweet debt deals
4. Commissioner-designate Avramopoulos to face three-hour interview on EU's migration portfolio
5. EU gives more aid to farmers hurt by Russia sanctions
6. EU must boost air, sea migrant rescues, says Amnesty International
Today
This Week
1. Alexander the Great's tomb not at Amphipolis, says Culture Minister
2. Greece may opt for unusual president to avoid snap polls, Venizelos says
3. Woman allegedly buried alive by accident in northern Greece
4. Salaries in Greece continue to slide, dipping 1.4 pct in Q2
5. Venizelos denies jihadis are being trained in Greece
6. Should you bet with Kissinger on where the world is heading?
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.