A Greek flag. Picture: REUTERS
A Greek flag. Picture: REUTERS

Athens — The Greek government on Friday said the country was "turning a page", after eurozone ministers declared its crisis over as they granted Athens debt relief under a bail-out exit strategy.

The eurozone ministers’ agreement comes nearly a decade after the country’s finances spun out of control, sparking three bail-outs and threatening its euro membership.

"Greece is turning a page, its debt is now viable," government spokesman Dimitris Tzanakopoulos said. "I think the Greek people can smile, they can breathe again."

"This is a historic decision," Tzanakopoulos told state TV ERT.

Following the eurozone ministers’ hard-fought agreement, declared earlier on Friday, Greece is slated to leave its third financial rescue since 2010 on August 20.

"The Greek crisis ends here tonight," said EU Economic Affairs Commissioner Pierre Moscovici, after marathon talks in Luxembourg.

The deal was expected to be an easy one, but last-minute resistance by Germany — Greece’s long bail-out nemesis and biggest creditor — dragged the talks on for six hours.

The ministers agreed to extend maturities by 10 years on major parts of its total debt obligations, a mountain that has reached close to double the country’s annual economic output.

They also agreed to disburse €15bn to ease Greece’s exit from the rescue programme. This would leave Greece with a hefty €24bn safety cushion, officials said.

"The agreed debt relief is bigger than we had expected," Citi European Economics said in a note.

"In particular, the 10-year extension of the EFSF loans’ maturity and most importantly the grace period on interest payments is a significant development," they said.

"The Greek government is happy with the agreement," Greek Finance Minister Euclid Tsakalotos said after the talks.

But, he said, "To make this worthwhile we have to make sure that the Greek people must quickly see concrete results … they need to feel the change in their own pockets."

The eight-year crisis toppled four governments and shrank the economy by 25%. Unemployment soared and still hovers above 20%, sending thousands of young educated Greeks abroad.

Optimism is tempered by Greece’s remaining fiscal obligations, which will demand serious discipline, observers say.

"This is a very tight programme. A surplus of 3.5% to 2022 and 2.2% (on average) to 2060 is not easy at all," Kostas Boukas, asset management director at Beta Securities, told Athens 9.84 radio. "We’ll have to see if the pledges will be kept, especially as they depend on international developments as well," he said.

Under pressure from its creditors Greece has already agreed to slash pensions again in 2019, and to reduce the tax-free income threshold for millions of people in 2020.

Further cuts will be made to maintain the 3.5% surplus, if necessary.

"It would be a terrible mistake to cultivate illusions that the end of the bailout means a return to normality," said pro-opposition daily Ta Nea. "What follows is tough oversight which no other country has experienced in a post-bail-out period."

The European Commission has already specified that Greece will remain under fiscal supervision until it repays 75% of its loans.

Athens has received €273.7bn in assistance since 2010, enabling it to avoid punishing borrowing rates on debt markets.

The International Monetary Fund, led by the tough-talking Christine Lagarde, welcomed the debt relief, but cited reservations about Greece’s obligations over the long term.

"In the medium-term analysis there is no doubt in our minds that Greece will be able to reaccess the markets," Lagarde said after the talks.

"As far as the longer term is concerned, we have concerns."

The reform-pushing IMF played an active role in the two first Greek bail-outs, but took only an observer role in the third in the belief that Greece’s debt pile was unsustainable in the long term.