After months of scrutiny and negotiations, it is time for relief talks between Greece and its lenders came to conclusion on Wednesday.

“We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance program,” Eurogroup president Jeroen Dijsselbloem, the Dutch finance minister, told a news conference. “This is stretching what I thought would have been possible not so long ago,” he added.

The finance ministers of the eurozone agreed on an offer of debt relief for Greece, while the International Monetary Fund committed to continue being part of the bailout process, in what has been described as a “breakthrough deal” that will give Greece a much-needed cash flow of €10.3 billion ($15.9b). The first tranche of the new bailout funds (€7.5b) will be released in June, with another 2.8b to come after the Greek summer – and only if Greece completes another set of privatisations and reforms in the revenue agency and energy sectors.

This agreement came as a recognition of the painful fiscal reforms pushed through the Greek parliament by Prime Minister Alexis Tsipras’ leftist-led coalition. Tsipras has been under heavy criticism for this new set of harsh measures that include the privatisation of major state assets and severe cuts to pensions and benefits, but the government is hoping to gain traction, as Athens was promised substantial debt relief in 2018, if that is necessary to meet agreed criteria on its payments burden.

This specific development was what reaffirmed the IMF’s involvement in the bailout program, but also came as a sort of defeat for Germany, which had remained opposed to any notion of debt relief. The IMF has long insisted on the European governments taking a hit to relieve Athens of some of its debt in order to 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. The agreement on debt relief came as a result of the European ministers investing much “political capital” and did not come unconditionally.

“The Eurogroup agrees to assess debt sustainability with reference to the following benchmark for gross financing needs (GFN): under the baseline scenario, GFN should remain below 15 per cent of GDP during the post program period for the medium term, and below 20 per cent of GDP thereafter,” said the official statement released on Wednesday.

“The Eurogroup recalls the medium-term primary surplus target of 3.5 per cent of GDP as of 2018 and underlines the importance of a fiscal trajectory consistent with the fiscal commitments under the EU framework,” it went on. The IMF’s European director Poul Thomsen said he believed the agreed measures (notably notably the adoption of legislation to deliver fiscal parametric measures amounting to three per cent of GDP that should allow to meet the fiscal targets in 2018) would “deliver the necessary debt relief”, specifying that the fund made a big concession by agreeing that the debt relief would only be finally decided in 2018, rather than up-front, as was the IMF’s initial position.

“Even if the discussions were long, the atmosphere was always extremely relaxed,” said the Socialist French Finance Minister Michel Sapin, offering praise for Alexis Tsipras. “This deal is first and foremost a declaration of confidence in today’s Greece.”

According to officials, mutual trust has returned to the talks, nearly a year after Tsipras’s rejection of austerity measures pushed Athens close to be pushed out of the euro. This kind of optimism was further confirmed when one of the finance ministers started playing the music of Zorba the Greek during the Eurogroup meeting.

“I think there is some ground for optimism that this can be the beginning of turning Greece’s vicious circle of recession-measures-recession into one where investors have a clear runway to invest in Greece,” said Greek Finance Minister Euclid Tsakalotos, returning from Brussels to Athens.