Greece to finally get bailout payment

The IMF and EU appear to have ironed out their differences over Greece’s bailout and releasing the long-delayed latest instalment to Athens.

The Washington-based body was adamant that it must be sure Greek’s debt was sustainable and drop to 120% of GDP by 2020.

Finance ministers spent 12 hours in Brussels intensively discussing the various options to achieve this and finished up in the early hours of yesterday.

Eurozone president Jean Claude Juncker did not give details other than to say there were complex technical details to be worked out and they would meet again on Monday to finalise the agreement.

German finance minister Wolfgang Schäuble said they had agreed that Greece should be lent funds to buy back their bonds on the secondary market.

These are available on the market at 65% to 80% of their original value. Mr Schaeuble said that Greece could buy back as much as €10bn worth of its bonds. It is understood that the money would be lent by the EU’s temporary rescue fund, the European Financial Stability Facility.

Mr Schäuble, speaking in Berlin, said he was confident that a satisfactory agreement will be reached on Greece at the meeting on Nov 26. It is expected that once the ministers have approved a deal, it will go back to member states where some parliaments need to agree it and then sign off finally at their next eurogroup meeting on Dec 3.

This would then allow the disbursement of the €31bn held back for months from Greece and possibly another €9bn due before the end of this year under their bailout programme.

IMF chief Christine Lagarde, who flew into Brussels for the meeting, wanted the EU to take a writedown on the loans, but this was flatly rejected. She has rejected allowing Greece an additional two years, to 2022 to get its debt down to 120%.

There were a number of different ideas of how to reduce the debt by about €14bn, but most of these were rejected.

These included the ECB returning any profits it makes on the Greek bonds it holds or take a haircut, and cutting the interest rate Greece pays on its first loan which came from bi-lateral loans from the other eurozone member states, including Ireland.

This would mean cutting the rate of interest to the Euribor rate, which would be below the rate at which countries borrowed the money for Greece. A number of countries, including Germany, said they could not legally do this.

The Greek prime minister Antonis Samaras is to meet Mr Juncker today in Brussels and said that now that Greece had fulfilled all the demands made by the member states and the troika, they should not suffer further delays in receiving the money.

Mr Samaras is under pressure politically to have the funding released in the wake of deeply unpopular austerity measures and budget cuts were voted through the parliament.

— Additional reporting Reuters and Bloomberg