Saturday September 20, 2014 Search
Weather | Athens
27o C
19o 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)  
Mayors resisting evaluation to face disciplinary action
Fyssas rally demonstrators face prosecutor after clashes
PM in energy talks ahead of crucial meeting with Merkel
Attiki Odos Lamia exit to close Sunday
‘Greece can meet its needs on its own’
Greece will be able to meet its obligations without any new assistance from the International Monetary Fund, Finance Minister Gikas Hardouvelis said on Friday in London, leaving the door ope...
Cyprus civil servants´ strike called off
Civil servants in Cyprus on Thursday called off strike action after the government shelved plans to tax lucrative one-off retirement bonuses as part of efforts to reduce the budget deficit. ...
Inside Business
SOCCER
Triumph for PAOK, historic result for Asteras in Europa League
Greek teams produced a patchy record on the opening night of the Europa League group stage on Thursday, as PAOK thrashed Dynamo Minsk, Asteras Tripolis snatched a draw at Besiktas and Panath...
SOCCER
Financial crisis forces Greek second division postponement
Greece's second soccer division Football League announced on Wednesday the postponement of the start of the season due to financial difficulties being faced by most clubs. "The board of dire...
Inside Sports
COMMENTARY
High stakes after the Scottish vote
We will soon know whether the Scots voted for their country’s independence or whether they will remain citizens of the “United Kingdom of Great Britain and Northern Ireland.” What was alread...
EDITORIAL
Breathing room
Even Greece’s biggest critics find it hard to deny that the debt-hit country has achieved an unprecedented fiscal turnaround within a very short period of time. Sure, progress in promoting t...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. ‘Greece can meet its needs on its own’
2. Mayors resisting evaluation to face disciplinary action
3. Fyssas rally demonstrators face prosecutor after clashes
4. PM in energy talks ahead of crucial meeting with Merkel
5. Attiki Odos Lamia exit to close Sunday
6. Young offenders get stipend for TEI admission
more news
Today
This Week
1. ‘Greece can meet its needs on its own’
2. Dozens of arrests at march to mark anniversary of Fyssas murder
3. EIB signs deals with Greece for 815-mln investment in infrastructure projects
4. Syntagma metro station to close for Fyssas tribute concert
5. Samaras heads to Azerbaijan for two-day visit
6. Hardouvelis signals Greece may skip IMF loans to exit aid curbs
Today
This Week
1. Greece on standby
2. Greece at bottom of social justice scale among EU28
3. Central Athens traffic restrictions back in force on Monday
4. Lost in the fog
5. Democracy under Pressure | Live Streaming
6. SYRIZA spokesman suggests gov't sought to stop NERIT airing Tsipras speech live
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.