Greece 'turning a page' as eurozone agrees debt relief

Eurogroup Berlin

Under the agreement reached by euro area finance ministers in order to ensure the sustainability of the Greek debt load after the expiry of the third bailout this August, Greece will receive a 10-year extension for the repayment of its European Financial Stability Facility (EFSF) loans and an additional 10-year grace period for interest payments.

"It is an exceptional moment", Pierre Moscovici, the EU's economy commissioner, said after the meeting. "We finally got to the end of this path which was so long and hard".

The eurozone ministers' agreement comes almost a decade after Athens stunned the world with out-of-control spending, sparking three bailouts and a near collapse of the euro single currency.

The deal was expected to be an easy one, but last-minute resistance by Germany - Greece's long bailout nemesis and biggest creditor - dragged the talks on for six hours.

The ministers agreed to extend maturities by 10 years on major parts of its total debt obligations, a mountain that has reached 180 percent of the economy - nearly double the country's annual economic output.

According to the source, Eurogroup ministers agreed that the final loan tranche to Greece will total 15 billion euros.

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.

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Greeks have seen their economy shrink by a quarter, unemployment spike and salaries and pensions slashed by about 40 percent since first falling into crisis in 2010.

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.

Eurozone states have agreed on a plan that they say will allow Greece to exit its eight-year bailout program and make its massive debts more manageable.

"Tomorrow we are expecting a decision for the adjustment of Greece's debt which will mark the end of an ordeal for Greece, and the end of austerity", Greek Prime Minister Alexis Tsipras said in Athens on Wednesday.

In addition to the carrot of disbursements, creditors also count on the stick of rising bond yields, which would endanger the access of the sovereign and private companies to debt markets should Greece not comply with its commitments.

But she added that the fund will not join the expiring 86-billion-euro bailout as the time "has run out", and maintained "reservations" on the long term sustainability of the Greek debt, which runs until 2060.

"Greek debt is sustainable going forward", said eurogroup president Mario Centeno.

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