LUXEMBOURG (AP) – Greece appears poised Thursday to get the approval for more rescue money from its peers in the 19-country eurozone, as well as the broad outlines of debt relief that is due when its bailout program ends next year.
Given that the Greek government has delivered on a wide array of economic reforms that were required for the payout of the next installment of rescue loans, the main focus of Thursday’s meeting of eurozone finance ministers is on the debt relief.
In the bailout deal, Greece’s European creditors had promised to provide cash and find a way to lighten the country’s long-term debt load as long as it kept a lid on spending and deeply reformed the economy.
However, the eurozone’s top official, Jeroen Dijsselbloem, sought to downplay expectations of how far the ministers’ meeting, called eurogroup, would get on the question of debt relief on Thursday.
“Today we will give more clarity to Greece,” he said as he joined the gathering in Luxembourg. “There won’t be a figure that rolls out of that. The figure will only come at the end of the program.”
Dijsselbloem said he hoped the meeting will mark a “major step forward” that builds on “the huge step that Greece put in.”
Though the meeting won’t mark the occasion when the “final decisions” on the size of the debt relief are made, Dijsselbloem said discussions will center on what kind of measures will be offered to Greece and the process by which all involved “move forward.”
One of the reasons why Greece’s bailout program has stalled over the past few months has been a disagreement between the eurozone and the International Monetary Fund on debt relief. The IMF, which has contributed financially to Greece’s first two bailouts but not the third, has wanted more information about what debt relief Greece may get before it gets more involved in the current program, which is due to end in the summer of next year.
Dijsselbloem said the creditors were “preparing Greece for the end of the program,” when Greece would have to stand on its own feet for the first time since 2010 and borrow money from international bond markets.
“It is a new phase,” he said.
Greece’s left-led coalition government has recently taken further cost-cutting measures, including trims to pensions, in hopes of getting a long-delayed rescue loan installment. It needs the money to meet roughly 7 billion euros ($7.8 billion) in debt repayments in July that it will struggle to meet from its own resources.
Just as important have been the talks on debt relief, which was promised as part of Greece’s last bailout deal, struck in 2015. Greek Prime Minister Alexis Tsipras has repeatedly said that debt relief is necessary to get the Greek economy back on track.
Despite years of austerity since Greece was first bailed out in 2010, the country’s debt burden still stands at about 320 billion euros ($360 billion), or around 180 percent of Greece’s annual gross domestic product. That’s largely because the Greek economy has contracted by around a quarter, meaning a worsening in the debt load even at a time when the country’s budget has improved markedly.
An outright cut in Greece’s debt is not allowed under euro rules, but the length of time the country has in paying back its debts can be extended, and the interest rates on those debts can be cut. For Greece, that would limit the amount it has to pay out on debt servicing each year, money it can use for the benefit of the Greek economy and society.
Euclid Tsakalotos, Greece’s finance minister, said he is “optimistic” about the prospects of a deal later.