The deal paves the way for Greece to repay nearly 10 billion euros
of bonds due in May and bolsters expectations it could soon return
to the bond markets for the first time since its debt crisis
escalated four years ago.
Athens and its European Union and IMF lenders had been haggling over
the bailout review since September, making it the longest inspection
of the country's finances since Greece was first rescued from
bankruptcy by the creditors in 2010.
"This review was the toughest we've had so far," Finance Minister
Yannis Stournaras told reporters after a week of marathon talks that
ended in the early hours of Tuesday.
"A difficult negotiation is over."
The talks stumbled at various points over reforms to make the Greek
economy more competitive, mass layoffs demanded by the lenders and
the capital shortfall faced by battered Greek banks.
The agreement is also a much-needed shot in the arm for Prime
Minister Antonis Samaras, who is under pressure to show light at the
end of the tunnel to austerity-weary Greeks ahead of tough European
and local elections in May.
He immediately promised voters that the deal with lenders came
without any additional demands for austerity, and promised a
500-million-euro windfall to poor, austerity-hit Greeks that will be
funded out of the primary budget surplus Greece unexpectedly posted
"A long period of ordeals is ending today and we are making a new
start," the prime minister told a joint news conference with
A senior Greek finance ministry official, speaking on condition of
anonymity, said that primary surplus was about 3 billion euros, much
higher than previous estimates.
Samaras, whose New Democracy party is trailing the rival,
anti-bailout Syriza party in the polls, also said he would lower
social security contributions and spend an additional 1 billion
euros to settle government arrears to suppliers this year.
Greece has no pressing funding needs until May, when 9.3 billion
euros of its bonds expire, the biggest refinancing hump the country
will face in the next three decades. The next tranche of aid will be
released by the end of April, allowing Greece to meet its May
obligations, an EU diplomat said, on condition of anonymity.
After nearly going bankrupt and crashing out of the euro zone in
2012, Greece's fortunes have revived sharply in recent months as a
six-year recession shows signs of bottoming out and investor
confidence in the country's prospects is rising.
[to top of second column]
In the latest sign of optimism, Piraeus Bank <BOPr.AT>, the
country's second-biggest lender, became on Tuesday the first Greek
lender to regain bond market access since 2009, when the country
plunged into crisis.
The bank's 500 million euro three-year unsecured bond issue
attracted bids and was set to be priced at 5.125 percent.
Also on Tuesday, Greece's debt agency sold 3-month treasury paper at
the cheapest borrowing cost since its debt crisis escalated in early
2010, with foreign investors buying up half of the issue. Athens
raised 1.3 billion euros, pricing the T-bills at a yield of 3.10
In Athens, the focus has increasingly turned to when Greece can
return to the bond markets as 10-year government bond yields
<GR10YT=TWEB> have dropped below 7 percent, their lowest level since
the country's 237-billion euro bailout started.
Athens officially plans to sell a small five-year bond at some point
in the second half of the year. But falling bond yields for
peripheral euro zone countries have encouraged Greek officials to
consider tapping markets even earlier, in a move that would bolster
Samaras's election prospects in May.
"Market conditions are improving much faster than we had expected
and this means that we could tap markets sooner than we planned," a
senior government official told Reuters on condition of anonymity.
"A successful market return by the banks will help us a lot to go
out to the markets ourselves," the official added.
(Additional reporting by Martin Santa in Brussels, writing by Deepa
Babington; editing by John Stonestreet and Susan Fenton)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.