Agreement between Euro zone finance ministers and International Monetary Fund (IMF) on reducing Greece’s debt has provided some hope to the nearly bankrupt economy. The main agenda is to release required funds or loans to assist the debt ridden economy. International lenders have jointly agreed to reduce Greece’s debt by 40 billion Euros, which is set to be 124 percent of Gross Domestic Product of the country by the end of 2020 and to further lower the debt levels there forth.

German finance minister, Wolfgang Schaeuble opined, “we will, if need be, consider further measures for the reduction of the total debt When Greece has achieved, or is about to achieve, a primary surplus and fulfilled all of its conditions.”  This concern from a senior government authority of one of the core nations of Euro zone suggests the seriousness of the issue and required actions for its remedies. The major plans are to recapitalize Greek banks and empower government financially, so that it could meet its financial obligations without any issues. Upon fulfilling the agreed conditions, Greece is expected to receive up to 43.7 billion Euros, obviously on installments. The fund is believed to assist the debt ridden economy to float a bit.

Some of the major agreed issues concerning reduction of Greek debt are lowering interest rates on official loans, extending of loans maturities to up to 30 years, from current tenure of 15 years and most importantly, providing 10 year interest deferral facility.

Upon release of the news, i.e., agreement between IMF and Euro zone ministers, Euro strengthened against USD. As per analysts, the move has not only reduced uncertainties over Greece’s future, but improved single currency zone’s prospects for the coming days. Some economists have also opined that declining debt ratio is an indicator for economic growth and optimistic economic outlook.

Though the agreement to reduce Greek debt has reached, it is time that will tell the true impact of consensus and sought packages. With the entire world on wait and watch mode, economic indicators coming from Greece and Euro zone shall definitely exhibit the outcomes of these economic reforms.