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Greece to get £7.4 billion bailout payment


Jeroen Dijsselbloem chairs a meeting at the office of the European Stability Mechanism in Luxembourg (AP)

Jeroen Dijsselbloem chairs a meeting at the office of the European Stability Mechanism in Luxembourg (AP)

Jeroen Dijsselbloem chairs a meeting at the office of the European Stability Mechanism in Luxembourg (AP)

Greece's European creditors have agreed to give the cash-strapped country the next batch of money due from its bailout and outlined a series of debt relief measures they hope will foster growth.

Jeroen Dijsselbloem, the eurozone's top official, said Greece has been cleared to get 8.5 billion euro (£7.4 billion), which will allow it to meet a big repayment hump this July.

He also said the International Monetary Fund was ready to provide more financial assistance to Greece via a stand-by arrangement and that Greece would get help with its debt payments in the future.

Some debt repayments could be delayed by 15 years.

In addition, he said Greece's growth levels could be taken into account in its repayments.

Mr Dijsselbloem said at the conclusion of the meeting of the eurozone's 19 finance ministers on Thursday that an agreement was forged "on all elements".

Under the terms of its 2015 bailout deal, Greece's European creditors had promised to provide cash and find a way to lighten the country's long-term debt load - as long as the government kept a lid on spending and deeply reformed the Greek economy.

Despite years of austerity since Greece was first bailed out in 2010, the country's debt burden still stands at about 320 billion euros (£280 billion), or around 180% of annual gross domestic product. That is largely because the Greek economy has contracted by around a quarter, meaning a worsening in the debt load even as the country's budget has improved markedly.

An outright cut in Greece's debt is not allowed under euro rules, but the length of time the country has in paying back its debts can be extended, and the interest rates on those debts can be cut.

For Greece, that would limit the amount it has to pay out on debt servicing each year, money it can use to help the Greek economy and society.

One of the reasons why Greece's bailout programme has stalled over the past few months has been a disagreement between the eurozone and the IMF on debt relief.

The IMF, which contributed financially to Greece's first two bailouts but not the third, has wanted more information about what debt relief Greece may get before it gets more involved in the current programme.

Thursday's compromise agreement with the IMF shows that the disagreement has yet to be fully dealt with.

However, Christine Lagarde, the IMF's managing director, said enough progress had been made at Thursday's meeting for her to go to the executive board to get the stand-by facility.

"I think there is a very strong focus on growth and that's a strong change of attitude and tone," she said.

The Greek government, whose popularity has fallen sharply as it imposed more austerity measures, faced more criticism on Thursday when more than 2,000 older protesters marched through Athens to demonstrate against pension cuts.

"We can't live on 300 euros (£260)!" they chanted, with some waving sticks.