In what they term as a major breakthrough, Eurozone finance minister have agreed to offer Greece more debt relief and bailout loans.
Eurozone Agrees to Further Bailouts for Greece
Following late night talks, the ministers who met in Brussels agreed to provide $11.5 billion in new loans. This comes just two days following an approval by the Greek parliament to increase spending cuts and taxes in accordance to the demands of international creditors.
The Eurozone ministers also indicated that Greece would also eventually receive debt relief. The International Monetary Fund had demanded debt relief for the country given that public debt was unsustainable at its current level of about 180% of the country’s gross domestic product.
The Eurogroup, made up of 19 finance ministers announced that they had achieved a major breakthrough with the Greek financial assistance initiative.
Speaking to reporters, Eurogroup President Jeroen Dijsselbloem said he had a package that would see Greek’s debt phased out gradually and confirmed that the IMF would remain onboard.
The Director of the IMF’s European Department, Poul Thomsen welcomed the acknowledgment of the unsustainability of Greek’s debt and the fact that relief was needed.
Mr. Thomsen however warned that the Washington-based IMF board was yet to agree to the IMF’s participation. He also pointed out that the extent of the debt relief was yet to be decided upon.
In the past, the IMF and the Eurogroup have failed to agree over how to reduce Greece’s debt.
The Greek parliament introduced new tax rises and budget cuts over the weekend to unlock further funding that the country desperately needs to repay its debts in the coming months.
The new bill further allowed for the creation of a state-owned privatization fund upon the request of the finance ministers.
Those who are against the austerity measures took to the street on Sunday in protest. Last year, the government, led by the Syriza leftist coalition agreed to its third bailout worth $96 billion.