Following talks in Brussels, the Greek government has agreed to unlock a further €10.3bn (£7.8bn) in loans from its international creditors, who have also agreed on easing the debt burden of Greece which totals €321bn (£245bn) – worth 180% of the country’s annual economic output. The tranche of bailout funds will be split into two payments: €7.5bn in June and €2.8bn in September. The European officials plan to extend the repayment period and cap interest rates.
However, the debt relief plan is far from the ‘upfront’ debt relief that The International Monetary Fund (IMF) has demanded. Poul Thomsen, director of the IMF’s European programme, said the IMF had made “a major concession”. “We had argued that (debt relief measures) should be approved up front and (now) we have agreed that they should be made at the end of the programme period.”
Germany was in opposition to the ideas about the debt relief, expressing beliefs that a debt relief could not be considered before the end of Greece’s current €86bn bailout programme in mid-2018.
“We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance programme,” said Jeroen Dijsselbloem, President of Eurogroup. He added that the package of debt measures would be “phased in progressively”. This review was the first one under Greece’s third eurozone bailout, secured in August 2015, after which Greek Prime Minister Alexis Tsipras called a snap election. This move happened only two days after the Greek parliament approved another round of tax increases and spending cuts, that were demanded by the creditors.