BRUSSELS, Belgium”•Eurozone finance ministers on Monday approved new debt relief measures to alleviate Greece’s colossal debt mountain in the wake of its huge 86-billion-euro bailout, but at levels far short of those demanded by the IMF.
“The Eurogroup endorsed today the full set of short-term measures,” including extending the repayment period and an adjustment to interest rates, the eurozone’s 19 finance ministers said in a statement.
The ministers accorded Athens the small measures to reduce Greece’s debt as a reward for completing the latest round of reforms demanded in the country’s massive bailout program”•its third since 2010.
“We will start implementing them in the next weeks,” said Klaus Regling, the head of the European Stability Mechanism, the eurozone’s bailout fund.
However, the ministers refused to officially sign off on the bailout’s second review as expected, telling Athens that there still remained a few open questions on Greece’s reform efforts.
The talks were marred by a row with the International Monetary Fund, as Europe and the fund remain as far apart as ever on the level of need for debt relief measures and the economic targets being required of Greece, which the IMF says are unsustainable.
This is crucial as the fund has remained adamant that it will not support a program unless the elements, including debt sustainability and the fiscal reforms needed to achieve the surplus target, are credible.
The hardline stance on debt relief by the ministers, led by Germany’s powerful Wolfgang Schaeuble, comes as key elections approach next year in Germany and the Netherlands, where bailout fatigue is running rife with voters.
The IMF played a major part in two earlier rescues for Greece, but balked at the third one for 86 billion euros in 2015 because it said Athens would never get back on its feet unless its mountain of debt was cut outright.
The so-called “short-term” measures announced by the ministers crucially do not include reduction of the face value of the debt, an idea that is firmly opposed by the eurozone governments.
Instead, the highly technical measures include extending maturities on certain loans and locking in the interest rate on some debt that risks future interest-rate increases.
“It’s very important for all sides, including the IMF, to not jeopardize this progress with increased uncertainty,” said Greek Finance Minister Euclid Tsakalotos.