Budget surplus earns Greece debt relief from EU
European officials today (23 April) confirmed that Greece will obtain more debt relief from its international lenders after meeting fiscal targets and achieving a budget surplus.
Last year’s surplus of €1.5 billion is the first since 2002 and came a year ahead of schedule, the European Commission and Greek government said on the fourth anniversary of Greece’s official bailout request.
It excludes debt servicing costs. Spending and revenue items made on Greek government bond holdings, such as aid to recapitalise Greek banks or profit returns to Athens by European central banks, are also not counted.
Talks about further debt relief for Greece will start in the second half of the year, said European Commission spokesman Simon O'Connor.
Measures will likely include stretching out the maturities of Greece’s rescue loans to about 50 years and cutting interest charges.
Four years of post-bailout austerity wiped out almost a quarter of Greece’s GDP and sent unemployment to record highs of about 28%.
"The country and its economy are in a much better position now, after very tough years for households and businesses," said Greece's deputy finance minister Christos Staikouras.
Earlier this month, Greece returned to global bond markets with the sale of €3 billion of five-year bonds. Athens pays a yield of 4.95% on the debt.
In 2012, the European Union promised Greece more debt relief if it met budget and reform targets. Euro zone governments hold more than 80% of its €319 billion public debt.
The relief is needed to ensure Greece reaches a debt-to-GDP ratio of 124% in 2020 and below 110% in 2022.
At the end of 2013, debt stood at 175% of GDP. The International Monetary Fund’s lending programme ends in 2016.
The EU and IMF has loaned €218 billion to Greece. Athens will receive €19 billion more by the end of the year.
The European Central Bank bought about €40 billion of Greek bonds and Athens obtained debt relief worth €170 billion in 2012, mostly by inflicting big losses on private bondholders.