The eurozone gave Greece its firmest offer yet of debt relief in what finance ministers called a breakthrough deal that won a provisional commitment from the IMF to return to taking part in the bailout for Athens, heartening investors.

After talks that lasted into the small hours of yesterday, Eurogroup finance ministers gave a nod to releasing €10.3 billion in new funds for Greece in recognition of painful fiscal reforms pushed through by Prime Minister Alexis Tsipras’s leftist-led coalition, subject to some final technical tweaks.

But a bigger step forward was a deal under which the eurozone agreed to offer Athens debt relief in 2018 if that is necessary to meet agreed criteria on its payments burden. In the meantime, the currency area’s rescue fund was given approval to take steps to smooth out Greece’s debt service path. However, German Finance Minister Wolfgang Schaeuble avoided any immediate commitment to rescheduling Greek debt that would have required him to secure approval from a sceptical parliament in Berlin before a general election next year.

The deal was nevertheless to secure agreement in principle from the International Monetary Fund to rejoin the eurozone in funding the bailout of Greece, subject to its board’s approval.

“We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance programme,” Eurogroup president Jeroen Dijsselbloem, the Dutch Finance Minister, told a 2am news conference.

Financial markets welcomed the agreement, which averted any repeat of last year’s Greek default to the IMF that took it to the brink of exit from the eurozone, threatening wider destabilisation of the 19-nation currency zone.

Greece will get most of the next instalment of bailout funds in July to redeem bonds held by the European Central Bank and repay IMF loans, as well as starting to clear arrears in government payments to the private sector, with the rest paid after the summer.

The IMF has long insisted on the European governments taking a hit now on the debt Greece owes them to relieve Athens of some of its burden and make its public finances more sustainable.

The refusal of Germany and others to do that had led to months of wrangling with the IMF in which Athens had been something of a spectator in negotiations.

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