Published: Sun, June 24, 2018
Finance | By Claude Patterson

Eurogroup seals historic agreement on Greek debt relief

Eurogroup seals historic agreement on Greek debt relief

A dedicated section in the long list of commitments that Greece will be asked to undertake for after its bailout includes sales and leases of state assets, from the Athens International Airport and the country's gas-grid operator Desfa by the end of this year, to Hellenic Petroleum by mid-2019, and Egnatia Motorway and the regional ports of Alexandroupoli and Kavala by end-2019.

Greek 10-year bond yields fell 8 basis points to a four-week low at 4.23 percent, while five-year bond yields fell 10 bps to 3.40 percent - their lowest level in nearly four weeks.

The Athens Stock Exchange also welcomed the decision with equity prices rising on Friday, and the basic share price index up 2.23 percent standing at 790.13 points shortly after the opening.

Greek Finance Minister Euclid Tsakalotos said the debt relief deal makes Greece's debt sustainable, allowing the country to return to debt markets.

And it provides the country with enough ready cash to coast it over almost two more years, without having to resort to expensive worldwide bond markets after bailout loans run out in August. "The Greek crisis ends here tonight in Luxembourg".

This brings the final disbursement to €15 billion, according to several European Union officials familiar with the discussions.

"A new chapter is opening for the country, but that does not mean that we should abandon the prudent path of fiscal balance and structural reforms our country needs", Tsipras said in statements broadcast live on Greek public broadcaster ERT.

"We will examine the sustainability of Greece's debt in the course of our upcoming Article IV Consultation with Greece, which starts next week".

European Economic and Financial Affairs Commissioner Pierre Moscovici spoke of a "historical moment for Greece" and said a new chapter was beginning for the country.

Greece's ability to finance itself after the end of its third bailout was a key concern. The country has required three worldwide bailouts. If worldwide investors don't like Greece's policies, they will ask for prohibitively high rates and Greece will be strapped for cash when its loans run out in 22 months.

This, Greek officials said, might even be used to pay off the country's debts to the International Monetary Fund earlier than planned.

The ministers also agreed that Greece could defer repayment of part of the loans by 10 years. "We think it's a tough requirement but you have to take the whole package as one".

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