Eurozone finance ministers have reached a deal with Greece to start debt relief for the country as demanded by the International Monetary Fund, and to release 10.3bn euros ($11.5bn) in bailout funds.

The IMF had said that easing Greece's debt burden was a condition for its continued participation in the bailout programme, despite opposition from Germany to giving the country more favours.

The 19 ministers from the countries that use the euro met on Tuesday two days after the Greek parliament passed yet another round of spending cuts and tax increases demanded by its creditors.

After reaching a deal at late-night talks in Brussels, Jeroen Dijsselbloem, Eurogroup chief and Dutch finance minister, said the ministers had achieved a "major breakthrough".

Greece urgently needs the next tranche of bailout money to repay big loans to the European Central Bank and IMF in July.

It has already fallen behind in paying for everyday government duties and wages.

Hard part of talks

Dijsselbloem said the ministers had agreed to release the 10.3bn euros, the reward for completing the first formal review of its 86bn euro bailout programme approved last July.

Greece's creditors would pay a first 7.5bn-euro tranche in June and the rest in a series of later disbursements.

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A hard part of the talks was defusing the row between Greece's creditors, the eurozone governments and the IMF, over the state of the Greek economy and debt relief.

The ministers agreed to offer Athens debt relief in 2018 if that is necessary to meet agreed criteria on its payments burden.

"The Eurogroup agreed today on a package of debt measures which will be phased in progressively," said Dijsselbloem, adding that he was "glad to confirm" the IMF would now stay on board.

Euclid Tsakalotos, Greece's finance minister, said he believed there was some ground for optimism for the future.

"This can be the beginning of turning Greece's vicious circle of recession measures into one where investors have a clear runway to invest in Greece and turn the corner in favour of the virtuous cycle," he said.

In a report on the eve of the Eurogroup meeting, the IMF had warned that Greek public debt at the current level of about 180 percent of gross domestic product was unsustainable and must be reduced.


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The IMF said that without restructuring, the debt load could soar to as much as 250 percent of output by 2060.

Germany, the eurozone's economic powerhouse, had been deeply opposed to alleviating any of Greece's debt and claims it is not necessary for now.

But, fortunately for Greece, Germany also firmly wanted the pro-reform IMF to remain in the bailout and Berlin will have to cede ground on debt relief to achieve that.

Source: Agencies