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Eurozone agrees deal to bring Greece out of financial crisis Greece 'turning a page' as eurozone agrees deal to end financial crisis
(about 13 hours later)
Eurozone nations have agreed on the final elements of a plan to get Greece out of its eight-year bailout program and make its massive debt more manageable. Greece’s government has said the country is “turning a page” after eurozone member states reached an agreement on the final elements of a plan to make its massive debt pile more manageable, ending an eight-year bailout programme.
The finance ministers of the 19 nations reached a surprisingly hard-fought compromise after talks stretched into Friday morning. “I have to say the Greek government is happy with this deal,” the finance minister, Euclid Tsakalotos, said on Friday. “But at the same time, this government will not forget what the Greek people went through in the past eight years.”
The ministers needed to finalise a deal between Greece and its international creditors that would allow it to safely emerge from its third and final bailout program on 20 August and face the markets again. Government spokesman Dimitris Tzanakopoulos hailed “a historic decision” that meant “the Greek people can smile again”. Financial markets rallied, with the country’s benchmark 10-year bond easing 0.2 points and the main stock index up 1.6%.
Tsakalotos said the plan, which allows Greece to extend and defer repayments on part of its debt for another 10 years and gives Athens another €15bn in new credit, marked “the end of the Greek crisis. I think Greece is turning a page.”
The country now has “all the building blocks ... to turn the agenda away from one of fiscal adjustment … to one of growth”, he said, but added that the government “has to make sure the Greek people quickly see concrete results ... They need to feel the change in their own pockets.”
The finance ministers of the 19 eurozone nations needed to finalise a deal between Greece and its international creditors that would allow it to safely emerge from its third and final bailout on 20 August and face the markets again.
Greece has really made the job – they have fulfilled their commitmentsGreece has really made the job – they have fulfilled their commitments
“Greek debt is sustainable going forward,” said eurogroup president Mário Centeno. French finance minister Bruno Le Maire said going into the meeting that “we have to recognise that Greece has really made the job – they have fulfilled their commitments.” Greece had already received €275bn in financial support from its international creditors over the past eight years and twice came perilously close to being kicked out of the eurozone group, EU commissioner Pierre Moscovici said.
Centeno said under the deal, Greece could delay back repayment on billions in loans by 10 years, giving it a financial breather while stricter deadlines could have further choked the economy over the next decade. It also got another injection of €15bn. “There have been enormous sacrifices. But at last, after eight years of difficult reforms, of tough adjustments in our programmes, Greece will be capable of moving on its own two feet.”
Greece had already received €275bn in financial support from its international creditors over the past eight years. Over those years, Greece twice got perilously close to being kicked out of the eurogroup, EU commissioner Pierre Moscovici said. But it also means the left-led government in Athens will have to stick to austerity measures and reforms, including high budget surpluses for more than 40 years. Adherence will be monitored quarterly.
“There have been enormous sacrifices,” he said.
Even after its bailout program ends this summer, it will be under strict supervision of its policies.
Still, Moscovici said, “at last after eight years of difficult reforms, of tough adjustments in our programs, Greece will be capable of moving on its own two feet.”
Earlier, Germay’s finance minister, Olaf Scholz, said: “There have been very good developments in Greece. The government and the people of Greece have done a very good job.”
Greece has been surviving primarily on loans from the eurozone since 2010, when it lost market access to funds because of a ballooning budget deficit, huge public debt and an underperforming economy, matched with an expansive welfare system.Greece has been surviving primarily on loans from the eurozone since 2010, when it lost market access to funds because of a ballooning budget deficit, huge public debt and an underperforming economy, matched with an expansive welfare system.
Greece’s third bailout is due to end in August. The debate between ministers at a meeting in Luxembourg centred on the how far to go in easing the repayment burden on those debts by extending maturities. Amid mounting fears that it would crash out of the euro, the country was plunged into an unprecedented recession from which it is only now starting to recover, posting economic growth of 1.9% this year after seeing its economy shrink by more than 26% since 2010.
The decision is being heralded as a definitive end to the period when Greece looked like crashing out of the euro and destabilising the single currency. The crisis toppled four governments, obliging the current prime minister, Alexis Tsipras, to force through tough reforms to balance the books. Wages have fallen by nearly 20% since 2010 with pensions and other welfare payments cut by 70% in the same period. The size of the public sector has been cut back by 26%.
Greece is posting economic growth of 1.9% this year after seeing its economy contract by 26% since 2010. Unemployment has dropped slightly this year but remains at 20% with youth unemployment at 43% Unemployment has dropped slightly but remains very high at 20%, with youth unemployment at an alarming 43% sending thousands of young Greeks abroad.
The Greek prime minister, Alexis Tsipras, has forced through tough reforms that have helped balance the country’s books. Wages have fallen by nearly 20% since 2010 with pensions and other welfare payments cut by 70% in the same period. The size of the public sector has been cut back by 26%. Investors have been encouraged by the government’s austerity measures, however, with Greece’s borrowing costs standing at about 4%, compared with 24% at the peak of the crisis.
Investors have been encouraged by these measures with Greece’s borrowing costs at around 4% compared to 24% at the depth of the crisis.
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