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Eurozone agrees Greek bailout payment, International Monetary Fund comes on board

20 June 2017

European creditors on Thursday approved giving Greece 8.5 billion euros ($9.5 billion) in bailout cash to meet a big summer repayment and promised that the burden of the country's future debt repayments would be eased.

Greek Prime Minister Alexis Tsipras has welcomed a decision by the country's global lenders to approve the disbursement of 8.5 billion euros in bailout loans and to detail medium-term debt relief measures following talks in Luxembourg.

Eurozone officials advised ministers meeting on Thursday to offer €8.5bn, an European Union source told Reuters in Luxembourg.

Greece avoided another potential brush with bankruptcy Thursday after striking a deal with European creditors to tide it over for the rest of the year and gained assurances that its repayment burden will be eased when it finally can stand on its own after almost a decade on financial life support.

As a consolation, in a compromise negotiated by France, Greece won a certain amount of clarity from the eurozone on debt relief, including an agreement to link debt repayments to Greek growth.

He said the best Greece could hope for is some sort of limited debt relief deal in 2018, which will likely be agonizing to extract from Europe but still won't solve Athens' woes.

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The IMF said it would propose its participation in Greece's bailout "in principle", while expecting further clarity on debt relief for the country when its present bailout programme expires next year.

"Today we will give more clarity to Greece and to the International Monetary Fund (on) how we will move forward, how we will calibrate debt relief needed next year", Dijsselbloem said.

Euro zone officials who had prepared the talks have earlier discussed a loan in the range of 7.4 to 8 billion euros, but decided at a meeting on Thursday morning to recommend to finance ministers a sum of 8.5 billion, one euro zone official said.

Greek President Prokopis Pavlopoulos also called on the euro zone finance ministers to spell out concrete measures to reduce the Greek debt burden.

Greece has been demanding debt relief from its creditors, saying it can never get its economy growing again without some help.

The IMF, meanwhile, will claim that it has not caved on debt relief, since the fund will not actually disburse money until a debt relief commitment is agreed at a later date.

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An IMF contribution was politically important for Germany, especially to strengthen the perceived credibility of the bailout.

Germany's finance minister says he is optimistic that Greece will win the approval of its peers in the 19-country eurozone s to get the next batch of rescue money due from its bailout program.

Dijsselbloem said the creditors were "preparing Greece for the end of the program", when Greece would have to stand on its own feet for the first time since 2010 and borrow money from global bond markets.

Thomas Oppermann, senior member of the co-governing Social Democrats (SPD), told Bild newspaper: "Schaeuble must put his cards on the table ahead of the election and say what German taxpayers will have to expect".

The IMF had insisted repeatedly that Greece's debt is not sustainable, and that the country would require significant debt relief from Europe before the fund could approve a new loan programme.

"For that Greece has to carry out reforms".

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On Thursday, some 1,500 pensioners protested in Athens against more than a dozen rounds of pension cuts since austerity was enforced seven years ago.