Greece Will Be Stuck In Its Bailout for Years to Come
The exit terms make it difficult for the next Greek governments to chalk up any wins.
The best-laid plans
Photographer: Angelos Tzortzinis/AFP/Getty Images
In a way, the debt relief deal Greece has received as it exits its bailout makes good sense: It keeps the country on a tight leash, all but eliminating the possibility that it will go on a borrowing spree in the financial markets and misspend the money as it’s done before. On the other hand, the scheme gets superimposed uncomfortably onto the country’s political cycle: It puts the next government on the spot, making a backlash against it all but inevitable.
The deal hammered out by the Eurogroup, comprising the euro zone finance ministers, extends by 10 years the maturities of 96.6 billion euros ($112.6 billion) in old bailout loans. They are already due in more than 30 years, but the new deal also defers interest payments on them by a decade. Besides, Greece gets 15 billion euros in cheap funding (the average rate for these bailout loans was 1.62 percent as of the end of March) that it can use to repay expensive debt to the International Monetary Fund, some 2.6 billion euros of which is due by the end of 2019.