After an 11-hour long Eurogroup meeting in Brussels that was completed at 3 am on Wednesday, Greece’s euro zone creditors agreed that Athens has fulfilled its obligations for the most part and decided to disburse a much-needed loan tranche in two parts: the first part, amounting to 7.5 billion euros in the second half of June, and the second, amounting to 2.8 billion euros in September.
The conditions for the disbursement of the first part of the tranche is that Athens makes corrections in the legislation on bad loans, insurance funds and privatizations. The September part of the tranche will be disbursed only if the Greek government has sorted out the establishment of an independent privatization fund controlled in part by the European Commission.
“We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance program,” Eurogroup President Jeroen Dijsselbloem said following the meeting.
Regarding the debt relief issue, euro zone finance ministers set out a series of short, medium and long-term measures.
In the short-term, the Eurogroup agreed to a series of measures to ease the repayment profile of the current Greek loans and reduce the interest rate.
They also set out a contingency set of measures which would be implemented at the end of the bailout program in 2018, based on a debt sustainability analysis. This may include buying-out the International Monetary Fund loans.
Finally, the ministers agreed to consider more debt measures in the long-term “in case a more adverse scenario were to materialize,” which would include further debt restructuring and the deferral of interest rates.
“It is an important moment for Greece, after a long time,” said Finance Minister Euclid Tsakalotos.
Regarding the participation of the IMF in the program, the Fund’s representative Poul Thomsen said he will take the issue to the board at the end of the year to approve the participation of the IMF in the Greek program. He said that the IMF will look at the progress of the program after the measures are taken and then revise the debt sustainability analysis.