Greece is set to obtain more debt relief from its international lenders after European officials confirmed on Wednesday that Athens had topped its fiscal targets and achieved a budget surplus in 2013.
Wednesday’s announcement come on the fourth anniversary of Greece’s official request for a bailout after it lost access to global bond markets. Earlier this month, Greece returned to the markets with the sale of five-year bonds.
The budget surplus is a sign of the progress Greece has made to fix its finances after four years of tough bailout-imposed austerity that wiped out almost a quarter of its GDP and sent unemployment to record highs of almost 28 percent.
“The country and its economy are in a much better position now, after very tough years for households and businesses,» said Greece’s deputy finance minister, Christos Staikouras.
The 2013 surplus, which came one year ahead of bailout schedule, paves the way for some form of additional debt relief from eurozone governments that are now holding more than 80 percent of Greece’s 319 billion euro public debt.
Athens hit a primary surplus, excluding debt servicing costs, of 1.5 billion euros or 0.8 percent of GDP last year, its first since 2002, the European Commission and the Greek government said.
The reading also excludes other one-off spending and revenue items, such as aid to recapitalize Greek banks or profit returns to Athens by European central banks, made on their Greek government bond holdings.
Talks about further debt relief for Greece will start in the second half of the year, said European Commission spokesman Simon O’Connor.
The debt relief is most likely to include stretching out the maturities of its rescue loans to about 50 years and also cutting interest charges on some of them.
The EU and the IMF have so far extended 218 billion euros of bailout loans to Greece over the past four years and Athens stands to get 19 billion euros more by the end of the year.
On top of this aid, the European Central Bank has bought about 40 billion euros of Greek bonds and Athens obtained debt relief worth 170 billion euros in 2012, most of it by imposing big losses on private bondholders.
Under the terms of a November 2012 deal, the EU has promised to provide further debt relief to Greece, on the condition that it meets targets for its primary budget surplus and reforms.
The debt relief for Athens is to ensure that after the International Monetary Fund lending program to Greece ends in 2016, the country can reach a debt-to-GDP ratio of 124 percent in 2020 and substantially below 110 percent in 2022.
The debt stood at 175 percent of GDP at the end of 2013.
On its return to bond markets on April 10 after its four-year absence, Greece sold 3 billion euros of five-year bonds to yield-hungry international investors. Athens is paying a yield of 4.95 percent on the debt.