DURING last night’s Euro zone finance ministers and the International Monetary Fund (IMF) talks in Brussels, European leaders clinched agreement to a deal that will allow Greece to get almost 44 billion more Euros in 3 tranches.
“Greece has shown that it is serious about reform” and has kept to its commitments, European Commissioner for Monetary Affairs Olli Rehn said at a news conference after the meeting.
“Greece has already come a very, very long way,” Rehn said.
According to the Eurogroup statement, the parties believe that the “necessary elements are now in place” for member states to approve a European Financial Stability Facility (EFSF) disbursement to Greece of €43.7 billion ($56.8 billion) in several tranches, with the formal go-ahead seen by Dec. 13 — a date which BNP Paribas noted was one day ahead of a round of key Greek treasury-bill redemptions.
We summarize in bullets about “Greece New Deal”:
- Goal is to get Greek debt down to 122% of GDP in 2020.
- Greece gets more breathing space, goal of 4.5 percent of Gross domestic product (GDP) primary surplus is postponed from 2014 to 2016.
- Greek loan rates are lowered by 100 basis points.
- Cutting guarantee costs for Greece’s EFSF loans by 10 basis points.
- Maturity on loans extended by 15 years (reducing payments).
- Lower EFSF fee.
- Public debt tender purchases of Greek sovereign debt may also take place
- Other countries to forgo profits on Greek debt that has been purchased by the ECB.
- Greece may do a debt buyback.
- Possibly deferring interest payments on EFSF loans by 10 years.
“All initiatives decided upon today will bring Greece’s public debt clearly back on a sustainable path,” Luxembourg Prime Minister Jean-Claude Juncker told reporters after chairing a meeting that ended early today. “This has been a very difficult deal.”
Euro region finance ministers persuaded a skeptical International Monetary Fund that Europe has a formula for rescuing the country that triggered the debt crisis.