Euro zone, IMF reach deal on long-term Greek debt

Mon Nov 26, 2012 6:12pm EST
 

By Jan Strupczewski and Annika Breidthardt

BRUSSELS (Reuters) - Euro zone finance ministers and the International Monetary Fund clinched agreement on a new debt target for Greece on Monday in a breakthrough towards releasing an urgently needed tranche of loans to the near-bankrupt economy, officials said.

After nearly 10 hours of talks at their third meeting on the issue in as many weeks, Greece's international lenders agreed to reduce Greek debt by 40 billion euros, cutting it to 124 percent of gross domestic product by 2020, via a package of steps.

The deal should open the way for a major aid installment needed to recapitalize Greece's teetering banks and enable the government to pay wages, pensions and suppliers in December.

However, discussions were continuing on the methods to be used to lower Athens' debt burden, including a possible debt buyback and a lowering of interest rates on loans to Greece.

The euro strengthened against the dollar after news of a deal was reported by Reuters.

"It's going very slow, but we have financing and a Debt Sustainability Analysis. We've filled the financing gap until the end of program in 2014," one official engaged with the talks said. A second official confirmed the figures.

Greek Finance Minister Yannis Stournaras said earlier that Athens had fulfilled its part of the deal by enacting tough austerity measures and economic reforms, and it was now up to the lenders to do their part.

"I'm certain we will find a mutually beneficial solution today," he said on arrival for the marathon talks.   Continued...

 
A Greek flag flutters in front of the moon in Athens November 26, 2012. REUTERS/Yorgos Karahalis