Eurozone finance ministers struck a significant deal with Greece on Wedensday that will enable the debt-stricken country to secure fresh loans worth 10.3 billion euros ($11.5 billion) from its international creditors.
The deal was reached at a time when Greece is in need of cash to make a debt payment due in July. Athens owes its lenders over 300 billion euros – an amount just below two times its annual Gross Domestic Product (GDP).
The International Monetary Fund (IMF) has also stressed that easing Athens’ huge debt burden was a condition for its continued participation in the bailout programme.
However, Germany has opposed making things easier for Greece, believing that offering debt relief would encourage other deeply indebted eurozone countries to reject austerity.
Following the talks, 19 eurozone finance ministers – who together form the "Eurogroup" – gave a green light to releasing 10.3 billion euros ($11.5 billion) in new funds for Greece in the wake of fiscal reforms adopted by Prime Minister Alexis Tsipras.
What's seen as a bigger step forward is the eurozone’s agreement to offer Athens phased debt relief starting in 2018. However, there won't be any immediate reduction in the amount that Greece must pay its creditors.
The deal was enough to encourage the International Monetary Fund to again join the eurozone in funding the Greek bailout.
Eurogroup chief and Dutch Finance Minister Jeroen Dijsselbloem, while addressing a press conference, said the ministers had achieved a "major breakthrough."
"This is an important moment in the long Greek programme, an important moment for all of us, since last summer when we had a major crisis of confidence between us," Dijsselbloem said.
Greece's creditors will pay a first 7.5 billion euro tranche in June and the rest in a series of later disbursements.