News24

Eurozone seals Greek bailout deal

2012-02-21 07:27

Brussels - Eurozone finance ministers sealed a deal for a massive new bailout of Greece in the early hours of Tuesday, several sources said.

"We have the essentials of the deal," a European Union official said, indicating it covered both a write-down of Greek sovereign debt held by private creditors and a related package of guarantees and loans being put up by eurozone governments.

The euro immediately jumped against the dollar in Asian trading.

The write-down of Greek sovereign debt accepted by private creditors was to be for 53.5% of paper value, 3.5% more than the terms earlier agreed.

In October, leaders said a 50% "haircut" would chop €100bn off Greece's €350bn total debts.

Finance ministers also gave their green light to €130bn ($171bn) in loans, in exchange for strict surveillance of the Athens government over coming years.

Tense talks

The deal, in doubt during weeks of tough negotiations, finally came after 12 hours of tense talks in Brussels.

These saw Greek Prime Minister Lucas Papademos - a former European Central Bank No. 2 - act as go-between for ministers with negotiators for private creditors.

The agreement will bring government debt in Athens down to 120.5% of gross domestic product (GDP) by 2020, a eurozone governmental source also told AFP.

This is just a fraction above the 120% target set by the European Union and International Monetary Fund, and means a €5.5bn gap in funding was found to bring it down from an estimated 129% according to the latest analysis by international creditors.

A deal became urgent because Greece faces €14.5bn in bond repayments on March 20.

Bankruptcy

Failure to meet this could have been seen as bankruptcy.

The euro rose to $1.3291, from $1.3185 immediately after the news from Brussels.

The euro also rose to 105.75 yen after the deal, from 105.43 yen in earlier trade.

National eurozone central banks earlier agreed to engage in their own write-down of Greek bonds.

Ministers were still working on a final statement to be issued at a media conference that would also cover plans for the EU and the IMF to install teams of officials in Athens to supervise Greek government management of revenues and expenditure.

This was to include the setting up of a blocked account that would ensure eurozone governments could be sure they would get their money back, with Greece deep in a fifth year of recession and massive cuts demanded on public sector wages and pensions.

Comments
  • Phumi - 2012-02-21 07:43

    If Eurozone was Africa and Greek a country it would have been rendered a Banana Republic by the media! This bailout will go straight to the hands of greedy bankers and not the people who really need it. Even worse this is the money that was suppose to be pumped into Africa to assist in building the continent. Now the funds are diverted from where they are needed most to people who just want to enjoy cheap wine with it!

      Sean - 2012-02-21 08:51

      Why should the ``eurozone`` give money to Africa , especially South Africa ?? African leaders criticize the whites / settlers all the time , they want to take their land and are ``chasing`` them away one by one !! Malema chased away many foreign investors already , SO WHY SHOULD THEY GIVE MONEY ?????? Regarding the Greeks , they are a bunch of lazy ..........

      Fidel - 2012-02-21 08:52

      Phumi, please, development aid is a misnomer, it should be called corruption facilitation. Western politicians are just lackeys of Western bankers.

      Sean - 2012-02-21 08:53

      Forgot one thing - The government doesn`t do much to protect the white farmes !! How many have been murdered ?? It is more like genocide !

      Glyn - 2012-02-21 09:53

      @Phumi ... There you are with the begging bowl once again! And who said that money was "supposed to be pumped into Africa"? Do not worry about Europe, worry about China colonizing Africa!

  • Mike - 2012-02-21 07:59

    I cannot understand this?? Why does SA not bail out Greece? Stuff the Eurozone, who needs the Settlers (sic)? We have millions to spend on parties and fast cars, etc.! Perhaps we can then get free wine for the next party???

      Stan - 2012-02-21 08:21

      troll

      Sean - 2012-02-21 09:14

      lol

  • Polly - 2012-02-21 08:53

    Haven't found in the heart of NO. 1?Let you in here,stdster.,.c0mfind the one with you for life to love each other.

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