European Union finance ministers and the IMF reached another in a series of deals with Greece on long-term debt. The deal will lead to the release of another tranche of around 44 billion euros in bailout funds for the country to pay its debts to creditors, including government payroll and pensions.

The deal aims to lower Greek debt but through a series of steps that fall short of just a forgiveness of some portion.

After nearly 10 hours of talks at their third meeting on the issue in as many weeks, Greece’s international lenders agreed to reduce Greek debt by 40 billion euros, cutting it to 124 percent of gross domestic product by 2020, via a package of steps [...]

A source familiar with IMF thinking said the global lender was demanding immediate measures to cut Greece’s debt by 20 percentage points of GDP, with a commitment to do more to reduce the debt stock in a few years if Greece fulfills its program.

To reduce the debt to 124 percent by 2020, the ministers were putting together a package of steps including a debt buyback funded by a euro zone rescue fund, reducing the interest rate on loans and returning euro zone central bank ‘profits’ to Greece.

Germany and its northern European allies have so far rejected any idea of forgiving official loans to Athens.

Here’s a good look at the details. Basically they get a reduction in the interest rate by 100 basis points, a two-year reprieve on getting to the EU budget targets (from 2014 to 2016), an increase by 15 years of the maturity of the loans (which reduces payments by spreading them over a longer time horizon), a lower payment to the European Financial Stability Fund, a forbearance of profits by member countries on Greek debt purchased by the ECB, and the possible debt buyback. However, some big countries, like Germany, don’t want to forego their profits on ECB-purchased debt.

Moreover, without a big writedown, the target of 124% of GDP by 2020 is probably impossible, especially in the current environment of austerity without good collection of tax receipts, a sure recipe not only for recession but continued increases in the deficit. And you can add to this the fact that the current Greek government will almost certainly not hold – opinion polls already show the left-wing Syriza in front. That will have an impact on the 2020 target as well.

The market certainly likes the deal, but for the people, it just means continued pain, and really only a debt jubilee will provide the necessary relief. Either that, or the long-term possibility of an exit from the euro so Greece can properly value its currency.

More from FT Alphaville’s Joseph Cotterill.