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Greece crisis declared ‘over’ as eurozone agrees debt relief
LUXEMBOURG, June 22, 2018 (BSS/AFP) – Eurozone ministers declared the end
of the Greek debt crisis early Friday agreeing debt relief and a big cash
payout for Greece, part of a broad bailout exit deal that will close eight
years of financial rescues for cash-strapped Athens.
Greece is slated to leave its financial rescue on August 20 and finance
ministers from the 19 countries that use the single currency were under
pressure to offer Athens a goodbye deal that left it strong in the eyes of
the financial markets.
“The Greek crisis ends here tonight,” said EU Economic Affairs Commissioner
Pierre Moscovici, after marathon talks in Luxembourg.
“We finally got to the end of this path which was so long and difficult it
is a historic moment,” the former French finance minister said.
The agreement is an important turning point for the eurozone nearly a
decade after Greece stunned the world with out-of-control spending and
sparked three bailouts and a near collapse of the euro single currency.
The deal was expected to be an easy one, but last-minute resistance by
Germany — Greece’s long bailout nemesis and biggest creditor — dragged the
talks on for six hours.
With writing-off loans off the table, eurozone ministers agreed to extend
maturities by 10 years on major parts of its total debt obligations, a
mountain that has reached 180 percent of GDP — almost double the country’s
annual economic output.
The eurozone creditors also agreed to disburse 15 billion euros ($17.5
billion) to ease the country’s exit from its programme. This would leave
Greece with a hefty 24 billion euro safety cushion, officials said.
“I am happy,” Greek Finance Minister Euclid Tsakalotos said after the
talks.
But “to make this worthwhile we have to make sure that the Greek people see
concrete results… they need to feel the change in their own pockets,” he
added.
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– ‘Concerns’ –
Greece’s latest 86-billion-euro programme was agreed in 2015 after six
contentious months of negotiation, bringing the level of assistance received
by Athens to 273.7 billion euros since 2010.
The rescue loans came in return for hundreds of stringent reforms that
landed like a rock on the Greek economy, which shrank by nearly 25 percent in
just a few years and sent unemployment surging.
But after the pain, including wage and pension cuts and tax hikes, Greece’s
economy has stabilised and is expected to post moderate growth this year.
Greece however will remain under the watch of its creditors after the
bailout and under stricter terms than for Portugal, Ireland and Cyprus
following their respective bailouts.
Under German demands, Greece’s debt relief in the short-term will be
conditional on the continued implementation of agreed reforms, which if
successful could inject about one billion euros to the government’s
underfunded budget every year.
“We will ensure that the pressure to implement further reforms remains
strong… in the medium and long term,” said Austrian Finance Minister
Hartwig Loger.
Opposite the hardliners were France and the European Central Bank, which
argued that reduced debt was crucial in order for Greece to gain the trust of
the markets.
The International Monetary Fund, led by the tough-talking Christine
Lagarde, welcomed the debt relief, but cited reservations about Greece’s
obligations over the long term.
“In the medium term analysis there is no doubt in our minds that Greece
will be able to reaccess the markets,” Lagarde said after the talks.
“As far as the longer term is concerned we have concerns,” she added.
The reform-pushing IMF played an active role in the two first Greek
bailouts, but took only an observer role in the third in the belief that
Greece’s debt pile was unsustainable in the long term.
BSS/AFP/HR/0940