BRUSSELS – After a meeting lasting 11 hours, the ministers of the euro zone finance have reached this night here in Brussels an agreement to give Greece new aid to 10.3 billion euro. A first tranche of 7.5 billion will be paid in June, the rest after the summer. At the same time, they found a painful agreement with the International Monetary Fund to gradually lighten the higher of the Mediterranean country’s debt, amounting to around 180% of gross domestic product.
The debt due in billions of euro
in a press conference at 2 am, the Eurogroup President Jeroen Dijsselbloem explained that “the ministers agreed incredible political compromises to achieve this agreement. ” The Dutch politician said that just a month ago he did not think that an agreement would be possible according to the guidelines decided during the negotiation of this night. It is “an important moment” for Greece, added the Minister of Finance greek Euclid Tsakalotos.
The package includes on the one hand the disbursement to Greece of new financial aid of 10.3 billion euro, in the third economic adjustment program by 86 billion euro signed in the summer of 2015. a first tranche of 7.5 billion it will be paid in June. The second tranche of 2.8 billion will come after the summer, presumably in September. The money must serve the country in particular to repay upcoming bond maturities.
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The second chapter, much more complex, relates to debt . Two weeks ago the ministers had agreed to a gradual easing of the greek public debt, as well as promised in 2012, once the country would achieve a primary budget surplus. The meeting of this night had to solve a political and economic node: reach an agreement with the Fund to allow the international organization to continue to participate in the rescue of Greece.
The lenders have decided that from 2018 l ‘ lightening will be to ensure that the gross financial needs of the country remain under 15% of GDP in the medium term, and below 20% of GDP in the long term. At the same time, they agreed to ask Greece a primary budget surplus by an average of 3.5% of GDP. The Fund is managed to snatch an easing of the greek debt, as called for some time; but according to the terms applied by the European creditors.
The Director IMF Europe, Poul Thomsen, said that the agreement was made possible by a grant from the Fund: in fact debt relief will materialize only in 2018, and not immediately. The date is not trivial: it is that of the end of the third adjustment program and allows the Merkel government to override the next elections in 2017. The Minister of Finance Wolfgang Schäuble did not want to go back to Berlin today with an unpopular effort to be implemented during this legislature.
the agreement provides for the debt relief measures in the short term, medium term and long term. Only the first will materialize before 2018, and are made in the technical measures to avoid the risks of volatility in interest rates paid to the European Stability Mechanism (known by the acronym ESM). The most substantial part lightening will take place after 2018 and would include among other things a possible cap on the payment of the rates of interest of Greece.
(source : IMF)
in a lengthy statement, marked by many technicalities, the Eurogroup states that decisions in this regard require formal assents by local governments Euros and will come “as long as Greece meets the Pact of Stability and Growth”. Commenting on the agreement, the French Finance Minister Michel Sapin said: “This agreement is first of all a declaration of faith in today’s Greece.” He added: “Although the discussions were long, the atmosphere was always relaxed.”
The meeting yesterday came after the Tsipras government managed to push through parliament in Athens a mechanism liked by his creditors and which provides an automatic correction of the public finances in the event of drift of the public deficit, an acceleration of privatizations, and an increase in indirect taxes. The measures have provoked new protests in Greece this weekend, but I’m the last piece in view of new loans after the reforms approved earlier this month.
greek debt maturing . In billions of euro
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