Eurozone nations yesterday agreed on the final elements of a plan to get Greece out of its eight-year bailout program and make its massive debt more manageable.
The finance ministers of the 19 nations extended day-long talks into yesterday and reached a surprisingly hard-fought compromise that had seemed within easy reach over the past few days.
The ministers needed to finalize a deal between Greece and its international creditors that would allow it to safely emerge from its third and final bailout program on Aug. 20 and face the markets again.
Photo: EPA-EFE
“Greek debt is sustainable going forward,” Eurogroup President Mario Centeno said.
French Minister of the Economy and Finance Bruno Le Maire said going into the meeting that “we have to recognize that Greece has really made the job — they have fulfilled their commitments.”
However, despite those good vibes, the deal to keep Greece’s debt manageable remained elusive on Thursday.
Under the deal, Greece could delay repayment on billions in loans by 10 years, giving it a financial breather while stricter deadlines could have further choked the economy over the next decade, Centeno said.
It also got another injection of 15 billion euros (US$17.5 billion).
‘ENORMOUS SACRIFICES’
Greece had already received about 275 billion euros in financial support from its international creditors over the past eight years.
In that period, Greece twice got perilously close to being kicked out of the Eurogroup, European Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici said.
Greece has needed massive financial aid from eurozone nations and international creditors to survive financially over the past eight years.
In return, it had to commit to stringent budget austerity programs that hurt the finances of ordinary Greeks and caused a major rift between Athens and many euro nations.
“There have been enormous sacrifices,” Moscovici said.
Even after its bailout program ends this summer, it would be under strict supervision of its policies.
“At last, after eight years of difficult reforms, of tough adjustments in our programs, Greece will be capable of moving on its own two feet,” Moscovici said.
STOKING GROWTH
One of the final issues is how to let Greece spread some of its debt repayments over more years to make sure the cost of repaying the loans does not stifle the economy.
Greece’s economy has already contracted by about one-quarter since its financial crisis began in late 2009 and growth is a key element to reducing the debt burden.
To make a deal possible on Thursday, Greek lawmakers last week pushed through a last batch of economic reforms required by the creditors, including pension cuts to healthcare and tax reforms.
Once the bailout is over, Greece would have to finance itself by borrowing on international bond markets.
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