The EU and IMF commence the next phase in solving the Greek debt crisis

The EU council has granted €8.5bn to Greece, while IMF director Christine Lagarde proposes an Approval in Principle.

Greece debt — The Greek debt crisis is far from over Reuters

The EU council has extended €8.5bn to Greece as part of its third tranche in the European Stability Mechanism (ESM) programme. The move is seen as a "major step forward" in order to solve the nation's debt crisis, which has amounted to over €300bn (£262bn, $334.90bn).

The amount forms one part of a policy package aimed at increasing Greece's growth rate and providing a remedy for the structural imbalances in public finances. Reforms in the labour market are also a crucial constituent of the package, which would mark a significant progress towards successfully completing the second review of the ESM programme.

"The Eurogroup commends the institutions, the Greek authorities and, foremost of course, the Greek people for their intense efforts and resolve", said Jeroen Dijsselbloem, president of the Eurogroup and president of the ESM Board of Governors, during a Eurogroup press conference.

"We are now going into the last year of the financial support programme for Greece. We will prepare an exit strategy going forward to enable Greece to stand on its own feet again over the course of next year."

The International Monetary Fund's (IMF) director Christine Lagarde has also proposed an Approval In Principle (AIP) to the executive board. The proposal would imply that the IMF would be supportive of policies relevant to Greece. AIP would also entail that IMF-managed resources would be supplied to the debt-stricken nation, conditional on the European creditors' ability to provide sufficient debt relief commitments for securing debt sustainability.

"I strongly believe that use of the AIP procedure will enable the IMF to leverage both reform and debt relief", Lagarde mentioned in a statement.

"It will give confidence to creditors to disburse to Greece under the ESM program in July—thus reducing a potentially serious stress on the Greek economy—and it will give confidence to investors on the prospects for the Greek economy to grow and its people to prosper."