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The Guardian - UK
The Guardian - UK
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Graeme Wearden (until 1.15) and Nick Fletcher

Debt campaigners criticise IMF over Greek deal - as it happened

Greek finance minister Euclid Tsakalotos (right) has finally persuaded eurozone creditors to unlock vital bailout cash.
Greek finance minister Euclid Tsakalotos (right) has finally persuaded eurozone creditors to unlock vital bailout cash. Photograph: John Thys/AFP/Getty Images

European markets end higher

News of the Greek debt deal has seen stock markets record some good gains - apart ironically from in Athens - while Greek bond yields have fallen sharply.

Germany’s Dax added 1.47%, France’s Cac closed 1.13% higher, while Italy’s FTSE MIB rose 1.66% and Spain’s Ibex ended 2.32% higher.

But after an early 1.5% rise, the Athens market ended virtually unchanged, slipping back 0.04% amid the threat of further strikes in protest against the proposed pension and tax reforms.

Greek two year bond yields are currently down 80 basis points at 7.4% as investors welcomed the progress in the bailout talks.

On that note it’s time to close for the day. Thanks for your comments, and we’ll be back tomorrow.

After Moody’s saying the Greek deal was credit positive, Fitch has also welcomed the late night agreement but warned of possible problems implementing reform measures. The ratings agency said:

The agreement reached between Greece and its eurozone creditors reduces the risk of another Greek liquidity crisis this summer, and incentivises the country to complete its third bail-out programme. However, with little debt relief offered upfront, the Greek government may find it progressively more difficult to continue with politically controversial measures required to meet ambitious programme commitments. Implementation risk therefore remains high.

The agreement highlights the improved relations between Greece and its official creditors since last summer’s often confrontational negotiations leading up to the current ESM programme. The Greek government has implemented prior actions, including pension reform and a contentious requirement for additional fiscal contingency measures to safeguard the 2018 budget target.

For their part, Greece’s official creditors have agreed to possible debt relief (nominal haircuts are still excluded)...

Delivering debt relief in stages and contingent on programme performance could incentivise the Greek authorities to meet programme targets. However, given the track record of slippage under previous programmes in the past five years, we think there is still a high risk that the 2018 surplus target will be missed despite the agreement on a contingency fiscal mechanism. This risk could increase if the conditionality in Wednesday’s agreement meant that sizeable debt relief came to be seen by Greek politicians or the public as a distant or unattainable prospect.

A question mark is therefore likely to remain over the sustainability of Greek debt in the medium term. While gross financing needs are modest over the next few years, substantial increases in gross financing requirements would follow in the long term without further debt re-profiling.

Our ‘CCC’ sovereign rating, which we affirmed in March, reflects risks to programme implementation and debt sustainability.

The Eurogroup “breakthrough” on debt relief was no such thing, says Joan Hoey, Greek analyst at the Economist Intelligence Unit:

The coveted debt relief upon which the [Greek] prime minister has been banking, to provide a political fig leaf for his acceptance of another bailout, remains out of reach, contingent and unquantified.

The Eurogroup did not finalise the long-delayed first review of the bailout programme. It looked at the reforms passed so far and found them wanting. It concluded that several conditions “prior reforms” will have to be met before any money can be handed over.

The release of funds would then follow in two sub-tranches, the first amount of €7.5bn in June, depending on successful completion of “prior actions”. The balance of €2.8bn will be released only after the clearance of government arrears and after the government has met milestones related to the privatisation fund, bank governance, the revenue collection agency and the energy sector. This disbursement is scheduled for the end of the third quarter.

The Eurogroup won a commitment from the IMF, with which it has been at loggerheads over debt relief, to participate in the bailout, pending approval from the Fund’s executive board.

We retain our view that disaffection in the party and among the electorate will grow, posing risks to political stability and Greece’s membership of the eurozone.

And now some comments emerging from the IMF:

Here’s a timeline of Greece’s incoming bailout funds and outgoing payments in the next few months:

Greek debt timeline

European markets are holding onto their gains as they head to the close. Jasper Lawler, market analyst at CMC Markets, said:

Stocks extended gains on Wednesday as a tentative agreement on Greek debt relief and a fresh seven-month high in the price of US oil offered more cause for optimism. Banks were top risers for a second day as markets price-in the earnings benefit of a possible US rate rise in the summer. Banks in the peripheral of Europe most exposed to Greek debt, including Spain’s Banco Santander, were top performers.

Less exposure to Greece and weak earnings from M&S weighed on the FTSE 100, which rose less than its European counterparts.

Greek shares rose and the yield on Greek Debt fell after the IMF and Germany deferred a quarrel on Greek debt relief until 2018... Greece avoiding another cliff-edge moment is undoubtedly positive for markets, which already face the uncertainty of the Brexit referendum and Spanish elections in June.

The funds to be released following the late night Eurogroup agreement should last Greece until the end of October when the second review of the bailout programme is due start, according to the Athens-Macedonian News Agency. It says:

The €10.3bn tranche that the Eurogroup decided to disburse to Greece will fully meet the country’s financing needs until the end of October, when the second review of the Greek programme is set to start, Eurozone officials said on Wednesday.

Describing the events behind the scenes at Tuesday’s Eurogroup, the sources said that the IMF and Europeans had reached a compromise in spite of their different initial positions, while confirming that the IMF will participate. According to one EU official, this was not so much a “power play” but more that all sides moved from their initial position, with the IMF fully understanding that the Eurozone operates in a different way from the fund.

European Commissioner Pierre Moscovici, Greek finance minister Euclid Tsakalotos, and EC vice-president Valdis Dombrovskis at the Eurogroup meeting
European Commissioner Pierre Moscovici, Greek finance minister Euclid Tsakalotos, and EC vice-president Valdis Dombrovskis at the Eurogroup meeting Photograph: Olivier Hoslet/EPA

Regarding the measures for the debt, the European sources said that there were no “immediate decisions” but this was not a surprise, since there were no debts maturing in the short term. In the medium-term, the Eurozone countries said they will examine the possibility of buying up debt to the IMF early, or the bilateral loans with Eurozone countries, using the unspent funds (approximately 20 billion euros) originally destined for the recapitalisation of the banks. This would, however, require the approval of some national parliaments.

According to Eurozone officials, the chances that Greece can return to borrowing from the markets at reasonable interest rates at the end of the programme are much higher following the agreement at Tuesday’s Eurogroup. They said that Greece’s access to the markets can begin to be restored gradually, in the second half of 2017, and that the aim is to restore full market access by the end of 2018.

The more credible Greece’s economic policy, including its success in delivering primary surplus targets, the smaller the spreads on Greek bonds will be, though borrowing from the Eurozone will always be cheaper, the same sources said. The second review of the Greek programme would begin at the end of October, they added, noting that the measures that remained to be taken will not be as difficult as those required by the first review.

In Greece trade unionists are already flexing their muscles and planning mass industrial action, reports Helena Smith.

Strikes are expected to start tomorrow when workers at the Piraeus Port Organisation and Thessaloniki Port Organisation begin a 48-hour walk-out in opposition to the controversial privatisation programme the government has signed up to.

Adedy, which represents employees in the public sector, has also decided to hold a Pan-Hellenic work stoppage on June 8. “We decided, today, after meeting health and education federations that we would take this action to protest all the things that these new measures mean: lack of staff, underfunding, appointments that should, but will never happen,” Adedy’s chief policy maker, Grigoris Kalomoiris told the Guardian.

Demonstrations earlier this month against the pension and tax reforms.
Demonstrations earlier this month against the pension and tax reforms. Photograph: Orestis Panagiotou/EPA

“The Eurogroup was a fiasco for Greece. The government was just a spectator while Germany rode roughshod over everyone else and made all the decisions. To conclude the review we agreed to sell off all our public wealth and impose more of the same counter-productive measures. It makes no sense. Come September/October we foresee mass and dynamic reaction because it is then that the measures will start to kick in.”

Kalomoiros said the trade union now firmly believed the only way out for the debt-stricken country was to leave the eurozone.

Back with German finance minister Wolfgang Schäuble. According to Bloomberg he has said a fourth Greek bailout programme is not needed as of now.

Wall Street opens higher

As expected, US markets have followed their counterparts elsewhere and moved higher in early trading, partly buoyed by the Greek agreement overnight and continuing strength in the oil price.

The Dow Jones Industrial Average is currently up 124 points or 0.7% while the S&P 500 opened up 0.28% and Nasdaq 0.34% better.

The moves came despite some weaker than expected US services and composite PMI data.

Updated

Schäuble also said there were no major changes to the Greek bailout programme, according to Reuters, so there was no need for German parliamentary approval.

Updated

German finance minister Wolfgang Schäuble has said last night’s result on Greece was a good one, and the next tranche of aid can now be paid out. But it looks like it’s not all sweetness and light with the IMF:

Updated

Here’s a link to the transcript of the comments by Klaus Regling, head of the European Stability Mechanism, after last night’s Eurogroup meeting:

Markets continue to be buoyed by the early morning Greek deal, although are now off their best levels.

Banks are among the main movers, both on the Eurogroup agreement and because a rise in US interest rates, which could come as early as June or July, is likely to bolster their balance sheets.

In Greece, the Athens market is currently up 0.45%, while the country’s 10 year bond yields are down 8 basis points at 7.3%. Two year bond yields are currently down 87 basis points at 7.37%.

Elsewhere in Europe, Germany’s Dax is up 1.4%, France’s Cac has climbed 1.1%, Italy’s FTSE MIB is up 1.3% and Spain’s Ibex has added 2.1%.

Meanwhile the FTSE 100 is up 0.6% and on Wall Street, the Dow Jones Industrial Average is forecast to open around 73 points higher.

Updated

The European Central Bank holds its regular meeting next week and some are hoping that it will discuss reintroducing a waiver to allow the central bank to accept Greek bonds (as UniCredit suggested below). FastFT reports (£):

Greek officials are optimistic that the eurozone’s top monetary policymakers will take a big step towards rehabilitating the country’s banking system next week, by deciding to accept Greek bonds as collateral for the European Central Bank’s loans for the first time in more than a year.

The ECB’s governing council...will meet next Thursday in Vienna. Officials are likely to use the Vienna meeting to discuss whether to reintroduce a waiver that allows the eurozone’s central bank to accept Greek debt in its regular auctions of central bank cash. Athens is confident that the council will support the reintroduction of the waiver.

The waiver was scrapped in February 2015 as the crisis escalated.

ECB headquarters in Frankfurt am Main.
ECB headquarters in Frankfurt am Main. Photograph: Daniel Roland/AFP/Getty Images

Updated

Someone else who thinks Germany gave the least ground at the marathon Eurogroup meeting, given the delay on any major decisions on debt. Economist Tullia Bucco at UniCredit Research said:

In our view, there are two important features in this framework that are intended to provide reassurance to the European creditors for which Greece poses a thorny political issue: 1. The bulk of the debt-relief measures will only be granted at the end of the program in 2018, if necessary, and 2. Long-term relief measures remain very vague.

All in all, Germany can be considered to be the winner of the negotiations, given that any major decision on debt relief will only be taken after next year’s general elections, whereas the IMF committed to participate financially to the program already before the end of 2016.

The agreement could also pave the way to returning Greek banks to some kind of normality:

Last but not least, we think that the deal would soon allow the ECB to reinstate the waiver for Greek bonds posted as collateral at its refinancing operations. This is good news for Greek banks.

Updated

There were some tired faces at today’s ECOFIN meeting, among ministers who worked late into the night on the Greek agreement.

Greece’s finance minister, Euclid Tsakalotos, looked positively pensive at one point:

Greek Finance Minister Eucleidis Tsakalotos (centre) and President of Eurogroup Dutch Finance Minister Jeroen Dijsselbloem (right), talking this morning
Tsakalotos (centre), meeting with Eurogroup president Jeroen Dijsselbloem (rigt) Photograph: Olivier Hoslet/EPA

Tsakalotos also had an expressive chat with Pierre Moscovici, EU Commissioner for Economic Affairs...

EU Commissioner for Economic Affairs Pierre Moscovici also chatted to Tsakalotos.
EU Commissioner for Economic Affairs Pierre Moscovici also chatted to Tsakalotos.

German Finance Minister Wolfgang Schaeuble (right) talking to Dutch State Secretary of Finance Eric Wiebes this morning.
German Finance Minister Wolfgang Schaeuble (right) talking to Dutch State Secretary of Finance Eric Wiebes this morning. Photograph: Olivier Hoslet/EPA

All sides made some concessions at last night’s Eurogroup meeting, but it does seem that Germany gave the least ground.

Writing for Macropolis, the Greek analysis site, Yiannis Mouzakis explains:

German Finance Minister Wolfgang Schaeuble is probably the one participant in the Eurogroup that completely achieved his objective. His only concession is that he had to compromise on his initial stance that Greece’s debt does not need to be discussed before 2023.

There is nothing in this agreement to make him uncomfortable beyond that. It does not require any major changes to the programme’s modalities, the targets remain, large-scale debt measures are not due to happen until after the German elections in autumn next year and the IMF has committed that it will go to its board with a recommendation to participate in the Greek programme with financing and a new programme that will ensure policing of compliance and reform implementation.

Yiannis also cautions that today’s deal could turn sour in a few months, particularly if the IMF concludes that Greece’s debt relief doesn’t go far enough.

Here’s the piece: A Eurogroup deal that might be hard to stomach

The mood in Athens

Greek Prime Minister Alexis Tsipras at his official residence today.
Greek Prime Minister Alexis Tsipras at his official residence today. Photograph: Orestis Panagiotou/EPA

Over in Greece, the government’s supporters have hailed the eurogroup deal.

Opponents, though, have dismissed it - and argued that Greece must leave the euro.

Our Athens correspondent, Helena Smith, reports

The sense of déjà vu – the underlying current of this six-year crisis – was in full play this morning, in the media, on the streets and in the commentary of politicians, trade unionists and businessmen, the actors in the drama.

While pro-government newspapers lauded the “white smoke” that had finally appeared at the end of a gruelling 11-hour euro group, opposition newspapers slammed it as a sham.

Avgi, mouthpiece of prime minister Alexis Tsipras’ leftist Syriza party, enthused:

“The review has been concluded, roadmap [agreed] for the debt.”

The paper quoted Syriza’s prominent MEP Dimitris Papadimoulis as saying Athens had finally moved on from vagaries to concrete plans regarding the country’s staggering debt pile.

“We are no longer speaking about the debt in general, vague terms but have a framework of an agreement, a concrete roadmap,” he said of the decision to deal with debt load in three stages, adding:

“It’s a good decision that allows us to turn the page.”

On the streets, however, enthusiasm was remarkably muted. Shopkeepers shrugged off any suggestion that Greece was about to turn the corner.

“It might bring some stability,” said Panos Tsekouras who runs a textile store in the heart of downtown Athens. “We won’t see the drama of last year but once the summer is over and the taxes have piled up who is going to pay the bill? There’ll be mayhem.”

Opposition politicians from the left and right described the deal as a fiasco.

Speaking to the Guardian, Panaghiotis Lafazanis, the former energy minister who broke ranks with Syriza to set up the breakaway anti-austerity Popular Unity party, predicted it would be only a matter of time before there was widespread reaction when the government tried to enforce new taxes and cuts.

Lafazanis told me:

“It won’t be able to enforce the measures it has agreed to. This is an agreement that solves no problems and on the contrary creates new ones.

Greece, simply, cannot survive in this currency. There will be a disorderly default and ultimate exit from the euro that will be all the worse for not being planned.”

Austria’s finance minister, Hans Jörg Schelling, hopes that the eurozone will avoid a summer of Greek debt drama.

Analyst Wolfango Piccoli of Teneo Intelligence is concerned that Greece hasn’t won the solid commitments which prime minister Alexis Tsipras has promised.

That may make it harder for Tsipras to hold his small parliamentary majority together, and implement the unpopular austerity measures it has agreed to.

Here’s Wolf’s key points:

  • After prolonged talks, Greece and its international lenders achieved a deal about the conclusion of the on-going review in the early hours of 25 May.
  • The standoff between Germany and the IMF has – for now – been settled by careful reference to the possibility of limited debt relief measures.
  • While this is a move in the right direction from the Greek perspective, the roadmap remains vague and the eventual meaningful debt relief measures distant.
  • Athens remains stuck with harsh fiscal targets and reform commitments but only vague promises of debt relief, leaving Tsipras badly exposed domestically.

Updated

The Greek agreement is part of a broader strategy to avoid rocking the boat until Britain’s EU referendum is over, argues my colleague Jonathan Freedland.

He writes:

Whatever the rights and wrongs of the [Greek] austerity argument, Cameron has wanted the issue to go away – at least for another month. Today’s bailout loan has achieved that.

Updated

Moody's: Greek deal is credit positive

Rating agency Moody’s has just announced that the Greek deal is “credit-positive”.

Moody’s says the promise of €10.3bn of bailout loans alleviates the danger that the country defaults this summer.

It also welcomes the “road map” on debt relief agreed by creditors, although it is light on details.

Although the announcement doesn’t provide specifics on the type of relief, it is clear that material relief will be considered only after the program expires in 2018 and remains contingent on the Greek governments’ ability to implement successfully the conditions associated with the program.

However, the agency is also concerned that Athens will struggle to implement the measures agreed with creditors.

We consider implementation risks in Greece to remain high, given the small governing majority, weak institutions, and the backdrop of political and social discontent.”

Updated

Mihir Kapadia, CEO at Sun Global Investments, is relatively upbeat about the deal:

The Eurozone provided Greece with a firm offer of debt relief yesterday at a meeting of finance ministers in Brussels, a decision which could see the Euro provide €10bn in new funds for the country. The IMF seems to have softened its stance significantly from its hard line position as it had previously insisted that Greece’s proposed programme did not offer a path to fiscal sustainability.

The positive conclusions to these talks are a good sign on a number of fronts – showing flexibility by the IMF and European ministers, and some early signs of improving confidence in Greece. Greek 10-year bond yields fell below 7% this morning for the first time since November 2015.”

We’re going to need a new metaphor....

Varoufakis: Greek deal is more 'extend and pretend'

Yanis Varoufakis, Greece’s former finance minister, has given the deal the thumbs-down:

A year ago, Varoufakis was doing battle with the eurogroup on a weekly basis (at least, that’s how it felt), trying to persuade fellow ministers to abandon their push for austerity packages laden with tax rises.

That approach died after the Greek people voted to reject creditors demands’, only for prime minister Tsipras to sign up to the third bailout.

If you missed the Greek agreement, it’s online here:

The Financial Times has a good word to describe the Greek deal - “messy”.

And that’s because the really sticky issue, of how to make Athens’ debts sustainable, has been kicked down the road. Although the creditors have made commitments, the agreement released in the early hours of this morning is light on detail.

Mehreen Khan and Alex Barker sum it up:

The ambiguities are legion. A target was set to maintain Greece’s gross financing needs at no more than 15 per cent of national income until 2030. And measures were outlined to do that, including maturity extensions and a possible buyout of IMF loans in 2018. The caveat: no numbers were agreed on what relief the measures would actually deliver.

And while the IMF dropped its most ambitious debt relief demands — including the need for them to be automatic when Greece exits its programme in 2018 — there was a big caveat. To participate financially in the programme before the end of the year, the IMF would need to approve a new debt sustainability analysis (DSA) on Greece that would meet its normal lending standards.

For Germany too, the deal amounted to a trade-off. Wolfgang Schäuble, German finance minister, met his two main red lines: no haircuts and no Bundestag votes before the German federal elections in 2018.

But to secure the IMF’s political participation, he made a concession: an implicit commitment to meeting a DSA that will be hard to retreat from. And language was softened on the requirement for Greece to meet a 3.5 per cent budget surplus target for at least the next 10 years; this would now be reviewed in 2018.

More here: Messy Greek debt deal leaves key questions unanswered

In another reassuring signal from the markets, the yield on 2-year Greek bonds has tumbled below the 10-year bond yield.

Why does that matter? Because it means investors are now rating Greece’s short-term debt as less risky than its longer-term borrowings.

That’s how markets usually operate -- but for months Greece’s two-year yields (which rise when prices fall) have soared over the 10-year yield. Why? Because if Greece can’t repay its debts, it will default on shorter-dated bonds first.

This chart, from Reuters’ John Geddie, explains all:

Although the London market is at a three-week high, City investors do recognise that the details of Greece’s debt relief are still up in the air.

Joshua Mahony of IG explains:

Eurozone discussions finally reached a conclusion regarding the restructuring of Greek debt, yet the outcome was far from constructive as ministers decided to kick the can by simply resume talks after the French and German elections.

This issue will drag on for years and there is a feeling that the Greeks will say whatever they need to in order to get a good deal. With austerity crippling the Greek economy, the hopes of it standing on its own two feet and paying back its debts anytime soon seem negligible.

Updated

Robin Bew of the Economist Intelligence Unit is also concerned about Greece’s debt mountain, which is currently 180% of GDP.

IMF criticised over Greek climbdown

The International Monetary Fund is coming under fire from debt campaigners this morning.

They’re disappointed that the Fund has abandoned its commitment to “upfront” Greek debt relief as part of last night’s deal.

Instead, medium-term debt relief will only kick in around 2018 - and the details are still

Sarah-Jayne Clifton, Director of the Jubilee Debt Campaign, says this isn’t acceptable:

“IMF staff are proposing to lend more money to Greece without the upfront and unconditional debt relief they called for. This is a major climb down, which once again breaks the IMF’s own rules not to lend when they know a debt cannot be paid.

Last night, the IMF’s Poul Thomsen agreed that the Fund had made a ‘major concession’, in order to reach a deal.

In return, all creditors agreed that Greece’s debts are unsustainable, paving the way to debt relief over time.

Clifton though, insists that action is needed now.

“Eurozone finance ministers cannot keep repeating this pattern of sticking plaster measures followed by near defaults and all night crisis meetings for the next 40 years. Only significant cancellation of Greece’s debt now, including payments coming due now such as to the IMF and ECB, will help tackle the humanitarian crisis in the country and restore the lack of confidence which is holding back Greece and the wider European economy.”

Updated

Economist Megan Greene, of asset management firm Manulife, says Berlin appears to have won last night’s Tussle in Brussels:

Greece’s stock market has jumped by 1.4% in early trading, led by bank stocks.

Greek bond yields hit six-month low

Greek government bonds are on an absolute tear this morning, as fears of a disorderly default fade away.

The country’s 10-year bonds are rallying hard, driving down the interest rate (or yield) on the debt below 7% for the first time since last November.

That’s an important sign – 7% is traditionally the level where a country’s debts are unaffordable.

So investors are calculating that this agreement is significant, despite the doubts and question marks.

Henrik Enderlein, director of the Jacques Delors Institute, sums up the deal:

Dijsselbloem: Deal is a really important step

After a few hours sleep, Eurozone ministers are returning to the Justis Lipsius building for a full Ecofin meeting with EU ministers.

They won’t be discussing Greece - instead, they’ll be debating an anti tax avoidance Directive.

Commissioner Pierre Moscovici just shared a touching embrace with Eurogroup president Jeroen Dijsselbloem.

Pierre Moscovici and Jeroen Dijsselbloem

A cheerful-sounding Dijsselbloem then says that last night’s agreement with Greece is a “really important step”.

All sides realised we had to get a deal, he says, even though we all realised it would be difficult.

The IMF was asking a lot, and we were asking a lot of Greece.

But the deal brings the IMF on board, strengthens confidence between all sides, and thus should improve confidence within the eurozone.

Q: So are we 100% sure that the IMF will be on board?

No, Dijsselbloem says. The Fund must conduct its own debt sustainability analysis, and the final decision is up to its board.

Analyst: Next Greek crisis will along soon

Marc Ostwald of City firm ADM Investor Services is also underwhelmed by the deal:

This is another to be sorted under ‘can kicking’, leaving any decision on genuine debt relief until 2018, after the French and German elections, but also not creating any precedents or short-term crises which might influence the Italian municipal elections on June 5, the UK Brexit referendum on June 23 or the Spanish election on June 26.

It also continues to impose austerity measures which will continue to strangle the Greek economy, per se ensuring that the next crisis moment in the Greek saga will not be far away.

Stock markets hit three-week highs

Storm clouds over the City, London.

European stock markets have jumped in early trading.

The news that Greece will finally receive the €10bn bailout tranche is easing concerns of another eurozone financial crisis over the summer, on top of Britain’s EU referendum.

In London, the FTSE 100 has swiftly gained 40 points, or 0.6%, to 6255. That’s its highest level since May 3rd. Germany’s DAX has gained 0.8%.

European stock markets this morning

Peter Spiegel, the FT’s former Brussels bureau chief, isn’t completely convinced by the agreement.

Last night’s deal may not be perfect, but it appears to ‘kick the can’ down the road until after France and Germany have gone to the polls in 2017.

Analysts at RBC Capital Markets explain:

€7.5bn will be released in June that will allow Greece cover maturing IMF and ECB loans in June and July and begin to clear arrears which have built up as the review process has stalled. The outstanding portion of the payment will then be made after the summer. There was also agreement on a roadmap for Greek debt relief. In the short term this is mainly through managing the interest rate and repayment profile of euro area loans. Further out, there was commitment on further measures once the programme is completed in 2018.

While not quite the unconditional debt relief the IMF had called for in its assessment of Greece’s debt sustainability, the measures are sufficient for the Fund to stay involved in the programme although that will still have to be formally approved by the IMF board.

The deal means that Greece should now be ‘parked’ until after next year’s German general and French presidential elections but, equally important, any decision on Greek debt relief won’t have to be taken in the German parliament until after the next autumn’s vote.

Eurozone government debt surges after Greek deal.

Money is pouring into government debt issued by the eurozone’s weaker members this morning, as investors react to Greece’s debt real.

This has driven down the yield (or interest rate) on peripheral government bonds -- a sign that traders are happy to buy these riskier assets.

Reuters has the details:

Portugal’s 10-bond yield fell 4.8 basis points to a three-week low at 3.02%, while Spanish and Italian 10-year bond yields fell to one-month lows at around 1.51% and 1.40% respectively.

“The agreement between Greece and its creditors is positive for risk sentiment and in turn peripheral bond markets,” said Rene Arecht, a derivatives market analyst at DZ Bank.

I imagine we’ll also see a rally when the Greek stock and bond markets open shortly....

Full Story: IMF makes concessions

Our Brussels correspondent, Jennifer Rankin, explains how the IMF has backed down over its demands for immediate Greek debt relief:

European officials have agreed to unlock €10.3bn in bailout money for Greece as the International Monetary Fund made a significant climbdown in its demand for upfront debt relief for the recession-hit country.

Greece’s international creditors emerged from an 11-hour meeting in Brussels at 2am on Wednesday having agreed on steps to ease the burden of Greece’s €321bn (£245bn) debt mountain, worth 180% of annual economic output.

But the debt relief plan was a far cry from the “upfront” and “unconditional” debt relief the IMF had demanded on Monday, when it warned that Greece would face an ever-growing bill to service its loans. Poul Thomsen, director of the IMF’s European programme, said the IMF had made “a major concession”. “We had argued that [debt relief measures] should be approved up front and [now] we have agreed that they should be made at the end of the programme period.

Here’s her full dispatch from Brussels, a few hours ago:

The agenda: Greece finally gets a deal

Good morning.

There’s a sense of relief in the eurozone this morning after Greece and its creditors finally hammered out a deal to unlock €10bn in bailout funds, and trigger work on debt relief.

After a lengthy meeting, which we liveblogged through the night, ministers emerged to report that a breakthrough had been reached.

Both sides appear to have given some ground to get the deal onto the table.

One the one hand, all creditors have agreed that Greece’s debt mountain is unsustainable – suggesting Germany has given up some ground.

On the other, debt relief isn’t as immediate or concrete as the International Monetary Fund has been demanded, meaning the Fund has made concessions too.

If you were snoozing during the action, here’s the key points:

1) Greece has finally received the green light to receive more than €10bn in bailout funds, easing concerns that it could face financial peril this summer.

A few prior actions do remain, concerning pensions and privatisations, but once that is resolved, the money will flow -- starting with €7.5bn in June.

Eurogroup president Jeroen Dijsselbloem told reporters that Greece’s programme was back on track.

“We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance programme....

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

2) In an important development, the International Monetary Fund has signalled that it could join the bailout. That could happen by the end of 2016.

However, the IMF’s European chief Poul Thomsen insisted that the Fund must check that the eurozone is offering substantial debt relief.

In a rare public appearance, Thomsen said:

We welcome that all stakeholders recognise that Greek debt is unsustainable. We welcome that it is understood that Greece needs debt relief to make it sustainable.

3) Eurozone ministers have agreed to “a package of debt measures” to make Greece’s debts sustainable.

That will start with short-term tweaks to Greece’s debts, to smooth out its obligations.

Medium-term measures are also promised, although not until 2018, which looks like a concession from the IMF.

There is also a commitment to consider whether further restructuring will be needed once the bailout ends, assuming Athens sticks to the programme and everything works out. However, this doesn’t appear to be as comprehensive, wide-ranging and unconditional as the IMF has been demanding.

4) The deal has been generally welcomed by Greece’s finance minister. Euclid Tsakalotos said it would help end the country’s vicious circle of austerity and recession.

Donald Tusk, the head of the European Council, said the Greek deal was good for the global economy.

Slovakia’s finance minister Peter Kazimir also sounded satisfied, comparing the negotiations to “a complicated birth”.

And France’s Michel Sapin was positively upbeat, saying the deal was “first and foremost a declaration of confidence in today’s Greece.”

But that was last night. Now that people have slept on it (however briefly), we should get some proper reaction.

Updated

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