Euro zone agrees on debt relief package for Greece

Euro zone finance ministers agreed in the early hours of Friday a debt relief package for Greece and a new disbursement of 15 billion euros as part of its current 86-billion-euro bailout program, the head of euro zone finance ministers said.

The deal involves a 10-year extension of maturities on loans from the European Financial Stability Facility and a 10-year deferral on interest payments, Mario Centeno told a news conference.

Centeno added that this will allow Greece to issue bonds across the yield curve. Athens is also likely to pay lower borrowing costs on its new bonds as the new package of aid will help set up a cash buffer totaling 24.1 billion euros that would cover Greek financing needs for 21 months, Centeno said.

Greek Finance Minister Euclid Tsakalotos said on Friday a deal extending and deferring repayments on part of Greece’s debt pile sent a clear signal to markets that the country had turned a corner from crises which rattled it in the past.

Euro zone finance ministers on Friday offered Greece a 10-year deferral and maturities extension on a large part of past loans as well as 15 billion euros in new credit to ensure Athens can stand on its own feet after it exits its bailout in August.

“I have to say that the Greek government is happy with this deal. We consider that debt is now viable, we can now have access to the markets .. But at the same time this government will not forget what the Greek people went through in the past eight years,” Tsakalotos told reporters.

Greece’s current international bailout, the country’s third rescue program since 2010, ends in August.

“I think this is the end of the Greek crisis, I think Greece is turning a page, I think it has all the building blocks there to leave the program with confidence that we can access the markets and we can implement our growth strategy and turn the agenda away from one of fiscal adjustment .. to one of growth,” Tsakalotos said.

he International Monetary Fund welcomed on Friday the deal on debt relief for Greece, saying it will improve debt sustainability in the medium term, but maintained reservations on the long term.

“The additional debt relief measures announced today will mitigate Greece medium-term financing risks and improve medium term debt prospects,” the International Monetary Fund’s managing director Christine Lagarde told a news conference.

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.

The fund will begin assessing the sustainability of the Greek debt “as early as next week”, Lagarde said, adding that the fund will remain engaged in Greece and will participate to the monitoring of the Greek economic performance and reforms after the end of the program.