European governments and the IMF sought to bury months of feuding over Greek debt levels in a tentative agreement that should see the release of up to €44bn in bailout funds needed to rescue Athens from insolvency.
But after almost 12 hours of talks for the third time in a fortnight between eurozone finance ministers, leaders of the IMF, the European central bank and the European commission struggled to reach a consensus, suggesting a lack of confidence that the effort to resurrect the Greek economy will bear fruit or that three years of European bailout policy was working.
The meeting agreed to shave projected Greek debt to allow it to level at 124% of GDP by 2020, entailing a 20% cut in Greek debt by the deadline.
With the IMF demanding a writedown of Greece's debt by its official eurozone creditors and Germany leading the resistance to such a move, declaring it illegal, the meeting agreed on a mixture of measures involving debt buybacks, lower interest rates on loans, longer maturity periods on borrowing, and ECB returns to Greece of profits on its holdings of Greek bonds.
In an increasingly arcane dispute entailing sophisticated number-crunching over recent weeks, the IMF had stuck to a bottom line of getting the Greek debt level to 120% by 2020, far below what eurozone and IMF inspectors concluded was possible.
A debt sustainability analysis last week said the debt level would be 144% without eurozone action to write much of it off.
The Europeans hoped to extend the IMF-set 2020 deadline for debt "sustainability" by two years, but Christine Lagarde, the IMF chief, stuck to the 2020 date.
While Berlin played for more time, until after next year's general election and the expiry of Greece's formal bailout schedule in 2014, the IMF has been demanding a clear, credible longer-term programme.
Greece met the terms for the bailout funds a couple of weeks ago, agreeing a budget and swingeing spending cuts. Eurozone loans of at least €31.5bn have been pending since last summer, but held up recently by arguments not between Athens and its creditors, but by disputes among the creditors.
Greece, where the eurozone's debt crisis erupted in late 2009, is the currency area's most heavily indebted country, despite a big "haircut" this year on privately-held bonds. Its economy has shrunk by nearly 25 percent in five years.
The key question remains whether Greek debt can become sustainable without eurozone governments having to write off some of the loans they have made to Athens.
A source familiar with IMF thinking said the global lender was demanding immediate measures to cut Greece's debt by 20 percentage points of GDP, with a commitment to do more to reduce the debt stock in a few years if Greece fulfils its programme.
To reduce the debt to 124% by 2020, the ministers were putting together a package of steps including a debt buyback funded by a eurozone rescue fund, reducing the interest rate on loans and returning eurozone central bank 'profits' back to Greece.
Germany and its northern European allies have so far rejected any idea of forgiving official loans to Athens.
German finance minister Wolfgang Schäuble told reporters that a debt cut was legally impossible if it was linked to a new guarantee of loans.
"You cannot guarantee something if you're cutting debt at the same time," he said.
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