"Major breakthrough" on Greece bailout achieved in Eurogroup meeting

Finance ministers of the 19-country eurozone have hammered out a deal in Brussels with Greece in the early hours of Wednesday after an 11-hour-meeting to which is described as a "major breakthrough" to start debt relief and unlock over 10 billion euros bailout cash for Greece.

The long-delayed tranche amounting to 10.3 billion will be paid with a first 7.5 billion euros tranche in June and the rest in several disbursements later.

The move came two days after Greek legislators approved fresh austerity measures including tax hikes and a new privatization fund.

"We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance program,.... This is stretching what I thought would have been possible not so long ago,"Eurogroup president Jeroen Dijsselbloem told a press conference.

"Of course this should lead to a full and positive conclusion of the first review, on that basis we've promised to look at debt and discuss debt sustainability, "added Dijsselbloem.

Greece urgently needs the next tranche of bailout money to repay billions of euros in loans to the European Central Bank (ECB) and the International Monetary Fund (IMF) in June and July.

The Eurogroup meeting also achieved a "major breakthrough" on the issue of Greece debt relief, which had been a key demand by the IMF.

The IMF insists that Greece needs "upfront" and "unconditional" debt relief, saying in an assessment on Monday that Greece cannot meet the terms of the bailout program and that interest payments on the soaring national debt would eat up 60 percent of the budget by 2060 without debt forgiveness.

However,the possible debt relief will be delivered at the end of the program in mid-2018 and the scope will be determined by the Eurogroup on the basis of a revised debt sustainability analysis (DSA), according to a Eurogroup meeting statement.

The Washington-based fund analyzed that Greece needed longer time to repay loans, with the interest rate on its loans fixed at 1.5 percent, and its creditors should make debt relief automatic once the bailout program ends in 2018.

Holding the view that Athens has done enough reforms, Germany argued that Greece could meet its austerity targets and stands strongly against any debt relief for Athens.

Meanwhile, the Eurogroup also agreed on a set of short-, medium- and long-term measures to ensure the sustainability of Greece's public debt.

"I think there is some ground for optimism that this can be the beginning of turning Greece's vicious circle of recession-measures-recession into one where investors have a clear runway to invest in Greece," said Greek Finance Minister Euclid Tsakalotos after the meeting.

Last year, international creditors agreed to give Greece an 86- billion-euro (96 billion U.S. dollar) bailout loan to avert its exit from the single currency bloc. However, the second tranche has been locked for months as Greece's austerity reforms being scrutinized by international lenders.

This breakthrough deal may ease the worries of a possible avert default by Greece that will lead to a big risk threatening the Eurozone recovery.

Ministers have "stretched their political capital" to get this deal on the table, Dijsselbloem told reporters.

Donald Tusk, president of the European Council, also hailed the agreement before heading to Japan for a G7 meeting.

"I welcome Eurogroup agreement on Greece. Strong message of stability for Greece, Europe and the global economy," Tusk said on his twitter.

(APD)