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Abu Dhabi, UAEThursday 20 September 2018

Greece and creditors agree final bailout review terms

Reaching a technical deal to conclude the fourth bailout review paves the way for discussion of debt relief measures

People protest in Athens against pension cuts planned for 2019. Pensions are expected to be hit following Greece 's financial bailout rescue programme. Petros Giannakouris/AP
People protest in Athens against pension cuts planned for 2019. Pensions are expected to be hit following Greece 's financial bailout rescue programme. Petros Giannakouris/AP

Greece and its creditors agreed on the next steps for completing the country’s final bailout review, a key milestone for exiting the programme and striking a deal on debt relief.

Government officials and representatives from the International Monetary Fund and euro-zone creditor institutions completed a week of discussions in Athens on Saturday. Greek Finance Minister Euclid Tsakalotos said reaching a technical deal to conclude the fourth bailout review, the so-called staff level agreement (SLA), paves the way for discussion of debt relief measures.

Euro-zone finance ministers may begin a discussion over how to ease the country’s debt burden of about €320 billion (Dh1.38tn) at a May 24 meeting. This month protests erupted over plans to overhaul the country's pensions system. The SLA also lets policymakers proceed with designing a framework for the country’s post-programme monitoring and determining what sort of strings would be attached to the debt relief. Mr Tsakalotos said such a mechanism will be discussed at the June 21 Eurogroup meeting.

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“The Greek authorities aim to implement these measures as swiftly as possible in advance” of the finance ministers meeting, according to a statement from the European institutions issued in Brussels. “To this end, intensive exchanges between the institutions and the Greek authorities will continue in the coming weeks.”

Euro-zone officials are willing to discuss prolonging loan repayment periods, although differences remain among creditors regarding which bailout loans could be restructured. They also differ over the size of the primary budget surpluses that Greece would have to maintain, and how automatic debt relief would be under the so-called French mechanism, which ties it to rates of economic growth.

Debate has also raged among creditor institutions over whether Greece’s exit from the bailout programme be accompanied by a precautionary credit line from the European Stability Mechanism. While the government in Athens has repeatedly rejected this option, officials from the European Central Bank and IMF have said it provides the strong post-bailout support the country needs.

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