After more than ten hours of negotiation, a decision was made to cut the rates on Greece’s bailout loans, suspend interest payments, engineer a bond buyback and give the country more time to repay its emergency funds.
The Eurogroup also paved the way for its next tranche of bailout funds to be released – a loan worth €34.4bn that is critical if Greece is to avoid bankruptcy. The International Monetary Fund (IMF) will hold back its portion until further conditions are met.
Eurogroup leader Jean-Claude Juncker said Greece would receive the first instalment of the tranche on 13 December. It has been waiting since June for the money.
Juncker said: “This has been a very difficult deal. All initiatives decided upon today will bring Greece’s public debt clearly back on a sustainable path.”
The terms of the new deal include the interest paid on Greek bailout loans being lowered by 100 basis points, interest payments on loans through the European Financial Stability Facility delayed by a decade and the maturities of bailout loans being extended by 15 years.
A statement by eurozone finance ministers said: “The Eurogroup is confident that, jointly, the above-mentioned initiatives by Greece and the other euro area member states would bring Greece’s public debt back on a sustainable path throughout this and the next decade and will facilitate a gradual return to market financing.”
The move was welcomed by the markets and the international community, with European and the euro climbing after news of the agreement broke.
Christine Lagarde, managing director of the IMF, commented: “I welcome the initiatives agreed today by the Eurogroup aimed at further supporting Greece’s economic reform program and making a substantial contribution to the sustainability of its debt.
“This builds on the significant efforts by the Greek government to carry forward its fiscal and structural reform agenda.”