Greek bankruptcy averted — for now

  • A worker cleans graffiti off the Bank of Greece logo outside the central bank's headquarters in Athens on Monday, Nov. 26, 2012. (AP Photo/Thanassis Stavrakis)A worker cleans graffiti off the Bank of Greece logo outside the central bank's headquarters in Athens on Monday, Nov. 26, 2012. (AP Photo/Thanassis Stavrakis)
  • Musicians from a municipal band play during a protest march to the ministry of Administrative Reform in central Athens, Tuesday, Nov. 27, 2012. Several hundred people took part in the peaceful demonstration. Greek municipal workers have occupied hundreds of town halls across the country to protest against government plans to suspend 2,000 civil servants for potential dismissal due to state budget cuts. (AP Photo/Petros Giannakouris)Musicians from a municipal band play during a protest march to the ministry of Administrative Reform in central Athens, Tuesday, Nov. 27, 2012. Several hundred people took part in the peaceful demonstration. Greek municipal workers have occupied hundreds of town halls across the country to protest against government plans to suspend 2,000 civil servants for potential dismissal due to state budget cuts. (AP Photo/Petros Giannakouris)
  • A man walks in the main market, in the northern port of city Thessaloniki, Greece, Wednesday, Nov. 21, 2012. Greece reacted with dismay Wednesday after European finance ministers failed to agree to release vital rescue loans, with the prime minister warning that the stakes are higher than just his debt-ridden country's future. (AP Photo/Nikolas Giakoumidis)A man walks in the main market, in the northern port of city Thessaloniki, Greece, Wednesday, Nov. 21, 2012. Greece reacted with dismay Wednesday after European finance ministers failed to agree to release vital rescue loans, with the prime minister warning that the stakes are higher than just his debt-ridden country's future. (AP Photo/Nikolas Giakoumidis)
  • An employee of the Stock Exchange is reflected in a chart displaying stock prices in Athens, Tuesday, Nov. 27, 2012. Greece has avoided imminent bankruptcy after its international creditors finally agreed to give it the money it urgently needs, but the cash-strapped country's economic distress is likely to drag on for years to come. (AP Photo/Thanassis Stavrakis) An employee of the Stock Exchange is reflected in a chart displaying stock prices in Athens, Tuesday, Nov. 27, 2012. Greece has avoided imminent bankruptcy after its international creditors finally agreed to give it the money it urgently needs, but the cash-strapped country's economic distress is likely to drag on for years to come. (AP Photo/Thanassis Stavrakis)
  • A protester takes cover from the rain after a protest near the parliament during clashes in Athens on Wednesday Nov. 7, 2012. (AP Photo Nikolas Giakoumidis)A protester takes cover from the rain after a protest near the parliament during clashes in Athens on Wednesday Nov. 7, 2012. (AP Photo Nikolas Giakoumidis)
  • Protesters chant slogans during a protest commemorating the student uprising against a military dictatorship in 1973, at the northern city of Thessaloniki  Greece, Saturday, Nov. 17, 2012. (AP Photo/Nikolas Giakoumidis)Protesters chant slogans during a protest commemorating the student uprising against a military dictatorship in 1973, at the northern city of Thessaloniki Greece, Saturday, Nov. 17, 2012. (AP Photo/Nikolas Giakoumidis)
  • A protester holding a Greek national flag walks next to graffiti reading "Power at the peoples hands " during clashes in front of the Greek parliament in Athens, Wed. Nov.7 2012. (AP Photo/Kostas Tsironis)A protester holding a Greek national flag walks next to graffiti reading "Power at the peoples hands " during clashes in front of the Greek parliament in Athens, Wed. Nov.7 2012. (AP Photo/Kostas Tsironis)
  • Protesters march during a protest commemorating the student uprising against a military dictatorship in 1973, at the northern city of Thessaloniki, Greece, Saturday, Nov. 17 2012. The banner is reading "Against Government - IMF - EU. (AP Photo/Nikolas Giakoumidis)Protesters march during a protest commemorating the student uprising against a military dictatorship in 1973, at the northern city of Thessaloniki, Greece, Saturday, Nov. 17 2012. The banner is reading "Against Government - IMF - EU. (AP Photo/Nikolas Giakoumidis)
  • A riot police officer is engulfed by petrol bomb flames thrown by protesters in front of the parliament during clashes in Athens on Wednesday Nov. 7, 2012. Greece's fragile coalition government faces its toughest test so far when lawmakers vote later Wednesday on new painful austerity measures demanded to keep the country afloat, on the second day of a nationwide general strike. (AP Photo Dimitri Messinis)A riot police officer is engulfed by petrol bomb flames thrown by protesters in front of the parliament during clashes in Athens on Wednesday Nov. 7, 2012. Greece's fragile coalition government faces its toughest test so far when lawmakers vote later Wednesday on new painful austerity measures demanded to keep the country afloat, on the second day of a nationwide general strike. (AP Photo Dimitri Messinis)
  • A protester appears from a tear gas cloud during clashes in front of the Greek parliament in Athens, Wednesday, Nov. 7, 2012. (AP Photo/Kostas Tsironis)A protester appears from a tear gas cloud during clashes in front of the Greek parliament in Athens, Wednesday, Nov. 7, 2012. (AP Photo/Kostas Tsironis)
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ATHENS (AP) — Greece has avoided imminent bankruptcy after its international creditors finally agreed to give it the money it urgently needs, but the cash-strapped country’s economic distress is likely to drag on for years to come.

After three weeks of negotiations, Greece‘s euro partners and the International Monetary Fund agreed to release vital loan payments totaling some 44 billion euros ($57 billion) and introduce a series of measures designed to reduce the country’s massive debts to a more manageable level within a decade. These include reducing the interest rates Greece has to pay on the loans and a bond buyback program.

Greek Prime Minister Antonis Samaras hailed the agreement in Brussels early Tuesday as a victory that heralds “a new day for all Greeks,” but the reaction in the markets was a bit more cautious.

Most stock markets in Europe were modestly higher. The Stoxx 50 index of leading European shares was up 0.4 percent, but the main stock index in Athens fell 1.4 percent as investors had hoped for some more debt relief for the country. The euro also gave up earlier gains to trade 0.4 percent lower at $1.2947.

“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. “Instead, it is just one more big kick of the can down the road.”

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 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 twice has agreed to bail out Greece, pledging a total of 240 billion euros ($310 billion) in rescue loans — of which the country has received about 150 billion euros ($195 billion) so far. 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 staring bankruptcy in the face together with a possible exit from the 17-country eurozone, with potentially chaotic repercussions for the world economy.

The meeting agreed to release 34.4 billion euros ($44.58 billion) in loans to Greece in December, with the remainder issued in three installments in the first quarter of 2013. The money will be used to help recapitalize Greece‘s struggling banking industry and pay back suppliers.

Greek Finance Minister Yannis Stournaras said the deal was “very important, for it keeps Greece in the euro, offers it a significant opportunity to exit the vicious cycle of recession and overindebtedness, and contributes to its debt reduction.”

But opposition leader Alexis Tsipras, whose Radical Left Coalition wants Greece to scrap its bailout commitments, accused the conservative-led governing coalition of failing to defend the country’s interests.

“The solution does not include a viable program for Greece; therefore, it is no solution,” he said. “(It follows) successive failures of a program that has destroyed our society and meets none of the targets it sets.”

The meeting in Brussels was the third time in the past two weeks that finance ministers from the 17 European Union countries that use the euro had tried to hammer out a deal on the next installment of bailout money for struggling Greece.

The main aim of the bailout program is to right Greece‘s economy and get it to a point where it can independently raise money on the debt markets once the bailout loans start to run out at the end of 2014. It has been clear for months that the country is far from achieving that goal. Greece‘s debt levels are expected to hit 190 percent of its annual economic output next year— some 346 billion euros ($448.37 billion). The talks have centered on trying to get Greece back on the path to sustainability by reducing the country’s debt load.

Current forecasts have Greece‘s debt level at 144 percent of its output by 2020. The IMF originally said it would only agree to the bailout program if the country’s debt was at 120 percent by then. Tuesday’s meeting reached a compromise between the IMF and the euro ministers, in which Greece now will have to reach a 124 percent debt load by 2020 and below 110 percent by 2022. The difference between the current forecast and the new 2020 target would involve a cut in Greece‘s debt load of some 40 billion euros ($51.82 billion).

To reach this, the meeting agreed on a raft of measures. These include:

• A cut of 100 basis points on the interest rate charged to Greece by other eurozone member states — excluding those that are also receiving bailouts.

• A 15-year extension of the maturities of loans from other countries and the eurozone's bailout fund, the European Financial Stability Facility, and a deferral of interest payments by Greece on EFSF loans by 10 years.

• A program whereby Greece could buy back some of its debt from private investors. The details of this program are still to be agreed on by the eurogroup and IMF.

The deal still requires the authorization of a number of parliaments in Europe, including Germany’s, where patience with repeated Greek rescues has been running low.

However, Rainer Bruederle, the caucus leader of German’s Free Democrats, the junior coalition partner, said he expects broad approval this time on Thursday.

“Conditions have been put together which maintain a tough mechanism toward Greece but still save us from a collapse of the Greek economy possibly having consequences that could pull down the whole of Europe,” he said.

Greek newspapers were divided on whether the agreement would give the country breathing space to right its economy or keep it trapped in years of recession and austerity.

The broad-circulation Ta Nea daily argued in an editorial that the deal affords Greece “a last chance” to escape the crisis.

The left-wing Efimerida ton Syntakton newspaper carried the headline “A poisonous (loan) installment,” arguing that the agreement “condemns Greek society to a slow death.”

Pan Pylas reported from London. Geir Moulson in Berlin contributed to this article.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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