Euro zone ministers back 130bn-euro bailout for Greece

Euro zone ministers back 130bn-euro bailout for Greece

 

           

BBC News, 21 February 2012          

Greece will get loans of more than 130bn euros (£110bn; $170bn) and have about 107bn of its debt written off.In return, it must slash its debt from 160% to 120.5% of GDP within eight years and accept a permanent EU economic monitoring mission.The country needs the funds to avoid bankruptcy on 20 March, when maturing loans must be repaid.

The euro immediately rose on reports of the deal, which was announced early on Tuesday, after 13 hours of talks. Under the deal hammered out in Brussels:

Greece will undertake to reduce its debt to 120.5% of GDP by 2020
Private holders of Greek debt will take losses of 53.5% on the value of their bonds, with the real loss as much as 70%
Greece's economic management will be subjected to permanent monitoring by euro zone experts on the ground
Greece will amend its constitution to give priority to debt repayments over the funding of government services
Greece will set up a special account, managed separately from its main budget, that must always contain enough money to service its debts for the coming three months

The first rescue package worth 110bn euros in 2010 was not enough to avert Greece's deepening crisis

"The funds that are coming in are not staying in Greece, are not being invested in Greece, are not here to help the Greeks get out of this crisis," Constantine Michalos, president of the Athens Chamber of Commerce and Industry, told the BBC.

"It's simply to repay the banks, so that they can retain their balance sheets on the profit side."

 

Anastasis Chrisopoulos, a 31-year-old Athens taxi driver, saw no reason to cheer the bailout.
"So what?" he told Reuters. "Things will only get worse. We have reached a point where we're trying to figure out how to survive just the next day, let alone the next 10 days, the next month, the next year."