There's hope for Greece. The debt-laden nation has made nice with the International Monetary Fund, securing $11.5 billion in fresh loans on Wednesday.
In July 2015, Greece defaulted on a $1.7 billion payment to the Washington-based fund. Wednesday's deal comes in addition to the $96 billion bailout program Greece agreed to last summer, which capped months of drama that rocked global markets. The European Central Bank is also set to give Greece $1.8 billion worth of earnings on the Greek bonds it holds, something German officials voiced concerns about.
"Most importantly, [this deal] includes the potential for some form of debt relief once the [bailout] program is completed [in 2018]," said Craig Erlam, senior market analyst at Oanda, based in London.
Officials were reluctant to agree to debt-relief measures for Greece right now, given upcoming elections in Germany and Spain, Erlam said. Germany has long been opposed to bailing out Greece, which has suffered from too much spending and failure to collect appropriate tax revenues from citizens.
Reports suggest Greece agreed to new austerity measures, on top of the ones that were part of the bailout deal last summer. Wednesday's deal represents a sharp reversal from just about a year ago when Greece citizens voted against a bailout deal in a special referendum. Prime Minister Alexis Tsipras and the Syriza Party were elected in January 2015 to fight austerity, according to Erlam.
"But once the Syriza Party was voted back into power [in September 2015], it superseded the July 2015 referendum against the bailout program and gave Tsipras the backing to accept whatever was necessary to ensure a brighter future for Greece," added Erlam
Greece's debt currently stands at 180% of its gross domestic product, a number many economists call unsustainable. "A number of these reforms do suggest that the near-term impact is going to be worse for the Greek economy," Erlam said, referring to an increase in the value-added tax, which may impact tourism, a major economic driver for Greece.