Current forecasts have Greece’s debt level at 144 percent of its output by 2020. The IMF had originally said it would only agree to the bailout program if the country’s debt was at 120 percent by then. A compromise between the IMF and the eurozone ministers was reached early Tuesday where Greece will now have to reach a 124 percent debt load by 2020 and below 110 percent by 2022. The difference between the current forecast and the new 2020 target would involve a cut in Greece’s debt load of some €40 billion.
To reach this, the leaders agreed on a raft of measures. These include:
—A cut of 1 percentage point on the interest rate charged to Greece by other eurozone member states, excluding those that are also receiving bailouts.
—A 15-year extension of the maturities of loans from other countries and the eurozone’s bailout fund, the European Financial Stability Facility, and a deferral of interest payments by Greece on EFSF loans by 10 years.
— The ECB will give up any of the profits it made on the Greek bonds it holds. Rather than giving back the money directly, which is against its founding charter, the ECB will hand it over to the eurozone’s national central banks, which will then pass the funds on to Greece.
— A program whereby Greece could buy back some of its debt from private investors. The timing for this program is still to be revealed — mainly to stop the price of the bonds from rising in the market, thereby undermining any hope of success. Germany’s Schaeuble said the debt buyback will be financed by the current bailout program, the next installment of loan payments, as well as Greece issuing more treasury bills.
The deal still requires the authorization of a number of parliaments in Europe, including Germany's, where patience with repeated Greek rescues has been running low.
However, Rainer Bruederle, the caucus leader of the Free Democrats, the junior coalition partner, said he expects broad approval when changes to the program are voted on this week.
‘‘Conditions have been put together which maintain a tough mechanism toward Greece, but still save us from a collapse of the Greek economy possibly having consequences that could pull down the whole of Europe,’’ he said.
Pylas contributed from London. Geir Moulson and Juergen Baetz in Berlin also contributed.