ATHENS, Greece – Greece will tap bond markets in the next three months for the first time since its financial crisis left it dependent on international rescue loans in 2010, the finance minister said Tuesday, hours after fellow eurozone countries agreed to release long-delayed bailout funds.
Stricken by a deep and prolonged financial crisis, Greece has been locked out of the international bond market by excessively high interest rates for the past four years, leaving it reliant on the rescue loans in exchange for which it had to impose strict austerity measures.
The country last issued long-term debt in April 2010 — a seven-year bond that had a 6 per cent yield. Its 10-year bonds later became unaffordable, with investors asking for 30 per cent interest. That rate has since fallen, however, to about 6.5 per cent after the country improved its finances.
Finance Minister Yannis Stournaras said Greece would now proceed with “a small issuance of bonds, three or five-year bonds, in the first semester of 2014” which would contribute to the country’s financing. He did not indicate what size the bond issuance would have, or specify a date.
The country will also post a primary surplus — the budget without taking into account interest payments on outstanding debt — of nearly 2.5 billion euros for 2013, Stournaras said. The primary surplus is key to the country’s debt relief efforts and its debt sustainability.
Earlier, finance ministers from the 18-nation eurozone, known as the Eurogroup, agreed to release a long-delayed installment of bailout funds, saying Greece will receive the 8.3 billion euros ($11.4 billion) in three doses. The first batch of 6.3 billion euros will be disbursed by the end of April, in time for a bond repayment in May.
Payouts of 1 billion euros each would be made in June and July, linked to the implementation of targets Greece has agreed to. The parliaments of some eurozone countries must ratify the payments before they are actually made, but the Eurogroup’s decision is key to the process. The amount does not include the IMF’s portion of the installment, which is paid separately.
Tuesday’s approval of the release of funds comes after the completion of a tortuous, months-long debt inspection by the IMF, European Central Bank and European Commission.
“This has been an arduous process but we have now a positive outcome,” said Jeroen Dijsselbloem, the Dutch finance minister who chairs the Eurogroup meetings.
The austerity measures Greece has had to take have led to frequent and often violent demonstrations. Authorities banned all protests in a large section of central Athens for the Eurogroup and a later meeting of all European Union finance ministers, but several thousand protesters were gathering just outside the exclusion zone in the evening.
Altogether, Greece has already received more than 200 billion euros in rescue loans, out of a total of 240 billion euros it has been promised. The bailout program, including the regular reviews of its reforms, is due to finish at the end of 2014, though the IMF will continue issuing some loans until 2016.
In their Tuesday meeting, Eurogroup ministers also discussed Portugal, another eurozone country which has been in a bailout program, but is due to exit it in mid-May.
They said the review of its reforms was still ongoing and that a decision was expected to be taken on April 24 for the disbursement of its last loan installment. It is still not clear whether Portugal will need an additional credit backstop once it exits its bailout program.
Its economy has improved significantly in recent months, with both the budget deficit and unemployment rate dropping.
Associated Press reporter Derek Gatopoulos in Athens contributed.