Greece reaches deal on loan repayment

BRUSSELS – Following weeks of recrimination and distrust, Greece and its creditors in the 19-nation eurozone reached an agreement Friday on extending the country’s rescue loans, a move that should dramatically ease concerns it was heading for the euro exit as soon as next month.

The agreement, which looked a long way off Thursday when one German official compared Athens’ request for more time to the infamous Trojan Horse, will mean that Greece will avoid going bankrupt, at least over the four months of the extension. It should also mean that capital controls won’t be needed and that Greek banks will have enough money to stock up their ATMs.

To get the money though, the Greek government has one more hurdle to clear. On Monday, it has to present a series of unspecified economic reform measures that are deemed acceptable by creditors and rooted in Greece’s previously enacted bailout agreement – something the government had promised not to do.

Still, the Greek government will be the author of the reforms pursued and that represents a change from the past five years when Greece has relied on rescue money to avoid going bankrupt and was effectively ordered to enact a series of austerity measures.

“We have established common ground again,” said Jeroen Dijsselbloem, the eurozone’s top official, after the meeting in Brussels.

And Greek Finance Minister Yanis Varoufakis said the deal allows both Greece and Europe “to turn a page. … As of today, we are beginning to be co-authors of our destiny.”

Varoufakis conceded that the Greek government would be “in trouble” if the reform measures, which are likely to include a series of measures to tackle corruption and tax evasion, aren’t backed by representatives from the European Central Bank, International Monetary Fund and European Commission – previously known as the troika.

However, he insisted they “won’t be shot down by the institutions.”

If the list of reforms is sanctioned, then it will be further detailed and agreed upon by the end of April.

Friday’s agreement was clinched just a week before Greece’s $270 billion bailout program expires and is aimed at buying time for both sides to agree on a longer-term deal to ease the burden of the bailout loans.

The Greek government isn’t getting the time it requested Thursday. Instead of the six-month bailout extension it asked for, it’s getting four – with Greece having to make big debt repayments after the new cut-off point, that’s a sign that its creditors aren’t willing to give Athens free rein.

Still, following weeks of tense negotiations in the wake of the election of the new left-wing Greek government, the final deal showed an element of compromise by both camps and investors appeared to breathe a sigh of relief with the Dow Jones index closed at a record high Friday as news of the Greek deal broke.