November 27, 2012
After two false starts in as many weeks, international lenders on Tuesday reached a deal to overhaul Greece’s faltering bailout programme and release a long-delayed €34.4bn aid payment by agreeing to a series of measures that could relieve Greece of billions of euros in debt by the end of the decade.
The measures, which include reducing interest rates on Athens’ bailout loans to levels so low that some countries will probably take losses, are intended to cut Greek debt to 124 per cent of economic output by 2020, or 20 percentage points lower than Athens’ current debt path, officials said.
But several elements remain unfinished, including a Greek debt buyback programme, the success of which remains so uncertain that Christine Lagarde, the International Monetary Fund chief, said her institution would not release its portion of the Greek bailout until the transaction was successfully completed.
Ms Lagarde played down the delay, saying the IMF and eurozone governments had disbursed their tranches at different points in the past. But the decision highlighted tensions between Brussels and Washington that forced Monday’s late night meeting – the third Brussels gathering in two weeks to discuss the Greek programme.