International lenders have locked in a new deal to reduce Greece's debt burden significantly in less than a decade. The news signified an important step for the bailout, but lenders must still finalize the details.
Late on Monday, 10-hour talks in Brussels came to a close with good news for one of the eurozone's most financially crippled economies. International Monetary Fund officials meeting with EU finance ministers announced that they had amended the amount of debt which Greece must shed to 124 percent of the GDP by 2020, a reduction of 40 billion euros (about $52 billion).
"It will certainly reduce the uncertainty and strengthen confidence in Europe and in Greece," European Central Bank President Mario Draghi told reporters.
Analysts currently expect Greece's debt to reach nearly 200 percent of GDP over the next two years.
Even though the lenders did not agree upon lowering the debt to 120 percent of the GDP by 2020 as had been expected, the new deal on Wednesday signified an important step toward releasing more bailout money to the debt-stricken country. Greece has been hoping for several months to receive another tranche worth 31 billion euros ($40 billion) in order to avoid bankruptcy. Previous meetings over Greece's debt burden had hindered the negotiators from releasing the bailout money.
Following negotiations on Monday, the international lenders still faced the next task of agreeing on the details of how to implement the plan. Possible measures that have not yet found a consensus in Brussels included determining the steps for a debt buyback, reducing the interest rates charges on Greece's loans and extending the duration of the loans.
Among the options Greece could be given, debt forgiveness won't likely be one of them. Prior to Monday's meeting, German Finance Minister Wolfgang Schäuble said that "national laws" in Germany and in other eurozone countries required Greece to repay its debt in full.
Jörg Asmussen, a German member of the European Central Bank's executive board, also said that debt forgiveness was off the agenda, at least for the time being.
kms/ccp (Reuters, dpa, AP)