Greece reaches $11bn deal with eurozone creditors

ThE IMF agreed to make a "major concession"

Euclid Tsakalotos, Greece's finance minister, speaks after leaving a Eurogroup meeting of European finance ministers in Brussels, Belgium, on Tuesday (Getty)

Eurozone ministers have reached a “breakthrough deal” to ease Greece’s debt burden and extend further bailout loans on Wednesday.

Greece’s creditors gave a green light allowing the release of €10.3 billion ($11.5bn; £7.8bn) in new loans to ease the country’s €321 billion (£245 billion) of debt, after an 11 hours meeting between 19 eurozone ministers in Brussels.

The bailout cash will be released in tranches, with over €7.5 billion ($8.4bn) to be allocated in June, and another payment expected sometime in the fall.

“We now have global agreement which opens the way for a significant disbursement of much needed funding for Greece and important measures on debt relief,” which will be progressively phased in, said EU Commissioner Pierre Moscovici.

"This is stretching what I thought would have been possible not so long ago."

The International Monetary Fund, which previously argued that Greece’s programme didn’t offer a path to financial sustainability, has stood down from its hard-line stance.

“We on the part of the IMF have made a major concession and I might as well be open about that. We had argued that these debt-relief measures should be approved up front and we have agreed that they will be approved at the end of the program,” said Poul Thompsen, IMF Director of European Departments.

Christine Lagarde, the managing director of the IMF, has previously said that the budget targets set for Greece are “highly unrealistic” and would require “heroic” efforts by the Greek people to meet the level of austerity required.

The €10.3 billion bailout is the long-delayed second instalment of Greece’s third bailout agreed last August, worth €86 billion (£67bn; $96bn).

The IMF and the Eurogroup have been at odds for months over the issue of reducing Greece's debt.

The agreement was made two days after the Greek parliament approved another round of spending cuts and tax increases demanded by its international creditors.

Greek Finance Minister Euclid Tsakalotos said the deal was an “important moment” for the country and may pave the pave for the nation to end its cycle of recession and austerity.

“This agreement underlines the considerable efforts and the confidence we can have in the Greek government today,” French Finance Minister Michel Sapin said after the meeting.