{"id":163123,"date":"2012-02-21T12:02:57","date_gmt":"2012-02-21T08:02:57","guid":{"rendered":"http:\/\/www.epress.am\/?p=163123"},"modified":"2012-02-21T12:02:57","modified_gmt":"2012-02-21T08:02:57","slug":"europe-agrees-on-second-bailout-for-greece-to-avert-default","status":"publish","type":"post","link":"https:\/\/epress.am\/en\/2012\/02\/21\/europe-agrees-on-second-bailout-for-greece-to-avert-default.html","title":{"rendered":"Europe Agrees on Second Bailout for Greece to Avert Default"},"content":{"rendered":"

Eurozone finance ministers have agreed a second bailout for Greece after 13 hours of late-night talks in Brussels. Greece is to receive loans worth more than 130 billion EUR ($170 billion USD), BBC<\/span><\/a><\/strong><\/span> reports.<\/p>\n

In return, Greece will undertake to reduce its debts to 120.5% of its GDP by 2020 and accept an “enhanced and permanent” presence of EU monitors to oversee economic management.<\/p>\n

Greece needs the funds to avoid bankruptcy on Mar. 20, when maturing loans must be repaid.<\/p>\n

After five straight years of recession, Greece’s debt currently amounts to more than 160% of its Gross Domestic Product.<\/p>\n

The euro immediately rose on reports of the deal.<\/p>\n

Repayment takes priority<\/strong><\/p>\n

The deal also means that private holders of Greek debt will take losses of 53.5% on the value of their bonds.<\/p>\n

When all the elements of the exchange are accounted for, the loss to investors is expected to be as much as 70%.<\/p>\n

Eurozone leaders and the IMF said in October that Greek debt should be reduced to a more sustainable level of 120% of GDP by 2020.<\/p>\n

The deal provides for the presence of EU monitors of Greece’s economic management as some members doubt Greece’s commitment to its spending pledges.<\/p>\n

Within the next two months, Greece will also have to pass legislation giving priority to debt repayments over the funding of government services.<\/p>\n

Athens will also have to set up a special account, managed separately from its main budget, that will at all times have to contain enough money to service its debts for the coming three months.<\/p>\n

The Greek parliament is expected to vote on the bailout on Wednesday.<\/p>\n

‘Significant efforts’<\/strong><\/p>\n

The agreement was announced early on Tuesday by Jean-Claude Juncker, prime minister of Luxembourg and chairperson of the eurozone finance ministers group.<\/p>\n

Juncker said the “far-reaching” deal would lead to “a very significant debt reduction for Greece” and ensure its future within the eurozone.<\/p>\n

He said “the eurogroup is fully aware of the significant efforts already made by the Greek citizens”.<\/p>\n

But he added that “further major and joint efforts by all parts of the Greek society are needed to return the economy to a sustainable growth path.”<\/p>\n

The head of the IMF, Christine Lagarde, who also took part in the negotiations, said the deal “should give enough space for Greece to restore its competitiveness”.<\/p>\n

Speaking after the deal was reached, Greek Prime Minister Lucas Papademos said he was “very happy” with the outcome.<\/p>\n

“It’s no exaggeration to say that today is a historic day for the Greek economy,” Papademos said, according to AP.<\/p>\n

The BBC’s Stephen Evans in Brussels says the agreement will mean deeper cuts in public spending that Greece had planned.<\/p>\n

It also means there should be no default or any knock-on effects in the rest of the eurozone \u2014 at least for the moment, our correspondent adds.<\/p>\n

But he says big questions still remain \u2014 including whether imposing medicine of this harshness will make the Greek economy stronger.<\/p>\n

A first rescue package worth 110 billion EUR in 2010 was not enough to avert Greece’s deepening crisis.<\/p>\n

Elections ahead<\/strong><\/p>\n

German and Dutch legislators are also scheduled to vote on approval for the deal next week. Politicians in both countries have been critical of lending more money to Greece.<\/p>\n

Successive rounds of austerity measures, demanded by Greece’s international creditors, have failed to restore growth and have provoked clashes between protesters and police.<\/p>\n

The Greek government fell last year after ex-Prime Minister George Papandreou called for a referendum on the eurozone rescue package.<\/p>\n

He was replaced by Papademos, an unelected technocrat who is expected to lead Greece until parliamentary elections in April.<\/p>\n

Measures passed by parliament last week set out 3.3 billion euros’ worth of cuts to salaries and pensions, and to health and defence spending \u2014 sparking a fresh series of protests.<\/p>\n","protected":false},"excerpt":{"rendered":"

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