Greece creditors agree debt relief in bailout exit deal

Jun 24, 2018, 19:13
Greece creditors agree debt relief in bailout exit deal

The eurozone creditors also agreed to disburse 15 billion euros ($17.5 billion) to ease the country's exit from its programme.

"It seems signs that European Union policymakers are willing to come together to afford debt relief to Greece is a positive punctuation in what has been an otherwise gloomy period".

"Greek debt is sustainable going forward", Eurogroup President Mario Centeno told journalists.

"We are turning a page", he added, but cautioned that the country "must not destroy the path taken on the reforms and on budgetery efforts".

Eurozone officials and the International Monetary Fund hailed the decision, and Greek Finance Minister Euclid Tsakalotos spoke of an "historic moment".

"Nobody should lose money of course", said European Union (EU) Economic Affairs Commissioner Pierre Moscovici at a news briefing in Brussels on Wednesday.

Overall, Greece will be leaving the program with a sizeable cash buffer of 24.1 billion euros covering the sovereign financial needs for around 22 months following the end of the program in August 2018, which represents a significant backstop against any risks.

"It did clearly appear that Greek government bonds were leading the charge today", said Rabobank's McGuire.

In addition, the Euro group gave the green light to release to Athens a 15 billion euros (17.4 billion US dollars) final loan installment of the 86 billion euro package sealed three years ago, which will be used to cover some of its debts to the International Monetary Fund and the European Central Bank.

Athens has received €273.7 billion in assistance since 2010, enabling it to avoid punishing borrowing rates on debt markets. Greece's economy has already contracted by about a quarter since its financial crisis began in late 2009 and growth is a key element in reducing the debt burden. The main stock index opened more than 2 percent up, but closed the day marginally down.

Opposite the hardliners were France and the European Central Bank, which argued that reduced debt was crucial in order for Greece to gain the trust of the markets.

Other agreed debt measures include the return to Athens of some €4 billion in profits the euro-area central bank made on their Greek bond holdings and the abolition of a €220 million annual penalty attached to some of the country's loans.

Greece however will remain under the watch of its creditors after the bailout and under stricter terms than for Portugal, Ireland and Cyprus following their respective bailouts.