Euro zone finance ministers agreed on Monday to lower the interest rate charged on loans made to Greece and to return profits made on Greek bonds by the European Central Bank to Athens, allowing the country to cut its debt.

After nearly 10 hours of talks, the ministers agreed that the interest rate on bilateral loans to Greece would be reduced by 100 basis points to 50 basis points above the cost of financing once Athens has reached a primary surplus of 4.5 percent of GDP, a source familiar with the discusssions said.

The 17 euro zone ministers also agreed that profits held by the ECB under its Securities Market Programme would be returned by national central banks to Athens, reducing Greece's debt pile by a further 11 billion euros, the official said.

"The Greek Loan Facility (GLF) will be lowered by 100 bps when Greece reaches a primary surplus of 4.5 pct. SMP will be around 11 bln euros," the source said.

The overall aim is to cut Greek debt by 40 billion euros by 2020 so that the debt-to-GDP ratio is cut from a currently forecast 144 percent to a target of 124 percent.