European Union leaders have cleared the release of long-awaited second bailout package for debt-ridden Greece by the end of the week.
This is to enable Greece avoid a default on paying back 14.5 billion euro debts due on March 20.
Finance ministers of the euro group, during a two-day meeting in Brussels on Thursday, kicked off the preparations to release the first tranche of the 130 billion euro rescue package.
As the first step, the ministers met shortly before the opening of the summit meeting and expressed satisfaction over the progress made by Greece in implementing wide-ranging reforms and austerity measures.
Greece had agreed to these reforms to receive the 130 billion euro ($170 billion dollars) assistance.
They reviewed the situation in Greece and its compliance to commitments with its European partners and the International Monetary Fund (IMF) on the basis of a report by the "Troika" experts of the European Commission, the IMF and the European Central Bank.
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There has been "good progress" by Greece in implementing the conditions it has agreed to with the EU and the IMF to receive the assistance urgently needed to avoid a bankruptcy, Jean-Claude Juncker, Luxembourg’s prime minister and chairman of the euro group said after the finance ministers’ meeting.
German Finance Minister Wolfgang Schaeuble said the finance ministers will finally release the second bailout after a phone conference on March 9.
The ministers are now waiting for the Greek government to agree with its private creditors on the remaining details of the planned debt write down.
"As far as I know, Greece has made good progress in this area. Therefore, I think we have come an important step forward," Schaeuble said as he arrived for the meeting.
The ministers have authorised the European Financial Stability Facility (EFSF) to raise from the capital markets the money needed for the debt write down.
It involves about 30 billion euros intended to make the debt write down attractive for private creditors.
Meanwhile, in a positive development the international Derivatives Association (Derivatenverband) said that it will not treat debt-write down by private creditors as a "credit event" or a complete default.
This implied that there will be no credit default insurance (CDS) on Greek bonds, which according to some estimates could have resulted in an extra $3.25 billion.
Greece on Friday made an official offer to Banks, insurances and other private creditors on debt write down. The programme runs for 30 years.
New bonds will have an interest of 2% until 2015 and after that interests will rise step by step. Through the debt write down, Greece’s debt burden will be reduced to 106 billion euros.
Altogether, private creditors will write off 53.5% of their claims from the Greek government.
Among the remaining 46.5%, 31.5% will be given as 30-year bonds with EFSF guarantee and 15% in form of EFSF bonds.
The international bankers association expects high participation by private creditors in the voluntary debt write down. But its manager Charles Dallara could not give any concrete figures in Mexico.