After hours of talks in Luxembourg IMF chief Christine Lagarde and the eurozone’s 19 finance ministers agreed to a payout of 8.5 billion euros to meet debt payments due in July and avoid another summer of Greek crisis.
Payment of the latest tranche of Greece’s 86-billion euro (USD 97-billion) has been held up for months by a row over its needs for debt relief pitting bailout-weary Germany against the IMF.
“I am pleased to announce we have achieved an agreement on all elements,” Eurogroup head Jeroen Dijsselbloem told a news conference.
“I think this is a major step forward,” he added.
In a breakthrough, Lagarde agreed that the Washington-based IMF would join Greece’s massive bailout, but said any payouts depended on the eurozone coming up with a full debt relief plan.
“Nobody claims that this is the best solution. This is a second best solution, but it’s not a bad solution,” said Lagarde, a former French finance minister.
The deal averts a repeat of the summer of 2015 when Greece spectacularly defaulted on an IMF loan, and allows Athens to meet seven billion euros of debt repayments due in July.
Athens all week insisted it would veto the deal, bitter that the latest disbursement would come without firm debt relief commitments after it delivered on tough reforms.
As a consolation, in a compromise negotiated by France, Greece won a certain amount of clarity from the eurozone on debt relief.
Debt relief “will be implemented at the end of the programme, conditional on its successful implementation” in 2018, said Dijsselbloem, who is also Dutch finance minister.
The eurozone would now draw up an “exit strategy” over the next year “to enable Greece to stand on its own feet again”, Dijsselbloem said.
After three bailouts, Greece’s debt currently stands at a staggering 180 percent of annual output, by far the biggest national debt pile in Europe.
(With inputs from agencies)