Eurozone finance ministers and the International Monetary Fund (IMF) struck a deal early Tuesday to release the next tranche of bailout money for debt-laden Greece.
After nearly 10 hours of gruelling negotiations, the ministers and the IMF decided to disburse 43.7 billion euros (some 56 billion U.S. dollars) of bailout money promised in a previously agreed rescue package.
Greece's international creditors also agreed to cut the country's debt to a level of 124 percent of gross domestic product (GDP) by 2020, and below 110 percent by 2022, through a package of measures, including lowering interest rate and extending maturities on loans to Greece.
"I'm pleased to announce that today we reached a political agreement on the next disbursement to Greece. I admit, however, that this has been a very difficult deal," Eurogroup President Jean- Claude Juncker said at the press conference.
"Let me first say that this is not just about money, this is the promise of a better future for the Greek people and for the euro area as a whole, a break from the era of missed targets and loose implementation toward a new paradigm of steadfast reform momentum, declining debt ratios and a return to growth," he said.
European Central Bank President Mario Draghi welcomed the new deal, saying "It will reduce uncertainty, and increase confidence in Europe."
Without the deal, Greece's debt is forecast to peak at around 190 percent of GDP in the coming two years, and likely to stay around 140 percent of GDP in 2020.
The Eurogroup and the IMF were at odds on how to keep Greece solvent in the long term, and the disagreement has delayed the release of a new tranche of bailout money as expected by many.
To convince its EU partners and international creditors of its determination to put its finance back on the right track, the Greek parliament had passed an austerity budget for 2013 and a structural reform package earlier this month.
The IMF argued that Greek debt must be reduced to 120 percent of GDP by 2020 and a "haircut" on debt held by public creditors would be an unavoidable option. However, the eurozone, especially Germany and its northern European allies, rejected the idea of reducing the value of the Greek debt they are holding.
The eurozone is to formally decide on the disbursement of the next tranche of bailout money for Greece by Dec. 13, subject to the completion of national procedures and a review of the outcome of a possible debt buy-back operation by Greece.
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