Debt deal, pain looms

Eurozone agrees short-term relief but finance minister warns against measures

Eurozone finance ministers struck a deal in Brussels yesterday on short-term measures to lighten Greece’s debt burden, but the conclusion of the country’s second review of its third bailout and the participation of the International Monetary Fund have been deferred to January.

“The Eurogroup endorsed today the full set of short-term measures, including extending the repayment period and an adjustment to interest rates,” the Eurogroup said a statement.

The decision was seen to reward Greece for implementing the latest batch of reforms demanded as part of its bailout program.

The head of the European Stability Mechanism, Klaus Regling, said after the meeting that the short-term measures will start being implemented “in the next weeks.”

The measures, however, did not meet the demands of the IMF, which has demanded substantial debt relief and harsher austerity procedures in order to join the Greek program.

Even though the short-term measures to ease debt repayment did not involve a reduction in capital, Greek Finance Minister Euclid Tsakalotos expressed satisfaction and described the deal as “progress,” but he warned international creditors, including the IMF, not to pressure Athens to implement measures it had not previously agreed to.

“The Greek economy has done an enormous amount of reforms,” he told reporters, adding that there should be no demands on Greece that “do not take into account the current political and social situation.”

The measures agreed to yesterday include the extending of maturities on certain loans and freezing the interest rate on some debt that could be susceptible to future interest rate hikes. Yesterday’s gathering in Brussels was overshadowed by the results of the Italian referendum, but the government is reportedly confident that their reverberations could actually work to expedite the conclusion of the review as Europe simply cannot afford to have too many open fronts.