Greece reaches deal to avert bankruptcy

New loans aim to help economy

Prime Minister Antonis Samaras said the agreement ends a dark period for Greece.
Prime Minister Antonis Samaras said the agreement ends a dark period for Greece.

ATHENS — European and global financial leaders agreed Tuesday to release $57 billion in critical loans to Greece and provide billions in additional debt relief in order to help the country stabilize its ailing economy.

After three weeks of negotiations, Greece’s euro partners and the International Monetary Fund agreed to release the loans in four installments beginning next month. The leaders also settled on a raft of measures — including a debt buyback program and an interest rate cut on loans — that will reduce the country’s debts by about $51.8 billion.

Greece’s prime minister, Antonis Samaras, hailed the agreement in Brussels as a victory. ‘‘Yesterday, a very gray, a very dark time for Greece ended definitively,’’ he said in a televised address to the nation, adding that the agreement ‘‘managed to ensure us remaining in the euro.’’


But the country will still face years of economic pain as austerity measures agreed to as part of the bailout package are implemented.

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Most stock markets in ­Europe were modestly higher on the news out of Brussels.

‘‘There remains the potential for this deal to fall apart in the medium term as there are a lot of moving parts and it is a long way away from the permanent fix that the IMF had been insisting upon,’’ said Gary Jenkins, managing director of Swordfish Research.

‘‘It is just one more big kick of the can down the road,’’ Jenkins said.

For three years, Greece has been struggling to convince markets as well as its creditors that it can get a grip on its public finances, which had spiraled out of control. The country is predicted to enter its sixth year of recession and is weighed down by an unemployment rate of 25 percent.


The so-called troika of the European Central Bank, IMF, and the European Commission has twice agreed to bail out Greece, pledging a total of $310.4 billion in rescue loans — of which the country has received about $194 billion. In return for its bailout loans, Greece has had to impose several rounds of austerity measures and submit its economy to scrutiny.

Without the bailout money, the country would be facing bankruptcy and a possible forced exit from the 17-country eurozone. This would have potentially chaotic repercussions for the world economy.

Nonetheless, the spending cuts and reforms insisted on by the troika have been painful. Ordinary Greeks are struggling to make ends meet as wages have been cut and taxes increased.