May 9, 2016 / 7:00 PM / 4 years ago

Greece says deal with lenders paves way for debt relief

BRUSSELS (Reuters) - Greece and euro zone lenders reached an agreement on Monday which will pave the way to disburse bailout cash to Athens and may include debt relief measures, Greece’s finance minister said after a meeting of euro zone finance ministers.

Greek Finance Minister Euclid Tsakalotos arrives at an extraordinary meeting of euro zone finance ministers on Greece at the European Council in Brussels, Belgium, May 9, 2016. REUTERS/Francois Lenoir

The preliminary deal may unlock more than 5 billion euros ($5.7 billion) to ease Greece’s squeezed finances and cover debt repayments maturing in June and July.

“It was a very good Eurogroup for Greece and I think a very good Eurogroup for Europe,” Euclid Tsakalotos told a news conference in Brussels after the meeting.

“There was an agreement on fiscal measures and structural reforms that closes the first review” of the Greek bailout programme, Tsakalotos said adding, however, that payments will be made after the Greek parliament adopts “prior actions” agreed with lenders.

The final statement of the Eurogroup meeting said prior actions included measures agreed with lenders in July, among them pension and tax reforms passed on Monday by the Greek parliament, but also additional contingency measures.

These measures should be applied if Athens failed to reach agreed fiscal targets in 2018, when the current bailout programme expires.

The additional measures have been requested by the International Monetary Fund as a condition to participate to the Greek bailout.

The IMF prefers lower fiscal targets for Athens, which it sees as more credible. But euro zone countries led by Germany insisted that a primary surplus of 3.5 percent of GDP in 2018 is possible.

Tsakalotos said ministers agreed to continue talks on contingency measures in the next two weeks on the basis of a Greek proposal, ahead of a meeting of euro zone finance ministers on May 24 that should finalise the deal.

The Greek finance minister was confident that at that meeting there may be progress on debt relief measures.

Greek public debt is expected to be at 182.8 percent of gross domestic product this year, according to economic forecasts of the European Commission.

Over the next two weeks, EU experts “will be working to clarify and come up with proposals for the discussions we had today on debt,” Tsakalotos said.

It was the first time euro zone finance ministers discussed Greece’s debt relief during the bailout programme. No haircut of the nominal value of the debt is on the table, but ministers said they were open to consider maturities and the timing for the repayment of the loans.

“There wasn’t a meeting of minds on all issues, but there was a clear feeling that people were trying to sort this out and to have debt as one aspect of the overall deal,” Tsakalotos said.

Reporting by Michele Kambas and Francesco Guarascio; Editing by Janet Lawrence

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