Eurozone clinches Greek debt deal

After almost 14 hours of talks in Brussels overnight, finance ministers in the euro currency group have reached a deal on providing Greece with 130 billion euros to help it avoid a debt default next month.

Bộ trưởng Tài chính Hy Lạp Evangelos Venizelos (trái) và thủ tướng Lucas Papademos họp báo sau cuộc họp của Eurogroup, Bruxelles, 21/02/2012 Reuters/Yves Herman

Visibly weary after the meeting, eurogroup chairman Jean Claude Juncker told reporters the agreement on this second bailout is comprehensive. It will keep Greece in the eurozone and bring it’s debt to a manageable level by 2020.

He says it will give Athens time to implement its reforms and allow for a return to growth.

It will also stabilize the eurozone, which has been rocked by speculation over its ability to survive the debt crisis without losing any of its members along the way.

Severely debt-burdened Greece needs funds by 20 March to avoid bankruptcy.

Concretely, Greece’s debt will be restructured. It will come down from a whopping 160 percent of gross domestic product now, to 120.5 per cent within eight years. The amount is still huge, but the Eurogroup, the European Commission and the European Central Bank think that Athens can survive with debts of that magnitude.

The private sector will be heavily involved, and has agreed to write off 53 per cent of the value of its Greek holdings to help out.

Keeping in mind the months of very worrying social unrest, the eurogroup and the European Commission acknowledged the pain and suffering of the Greek people.

This meeting means that Greece’s 16 partners in the eurozone will now go ahead and launch the necessary procedures to increase the size of the bailout fund and the way it disburses money. The money is to be made available until 2014.

But given the profligacy of the Greek government in the past and above all the fact that it has lied in the past, they don’t plan to give the money away.

The Greek government got a stern warning that it still has plenty of commitments to live up to by the end of the month, that is, by next week.

The European Commission insists that it will be watching developments closely. A special mechanism will be set up to make sure that Athens complies. The mechanism will involve beefing up the monitoring team that Brussels already has in place. This means more staff and wider duties.

At the beginning of March, the ministers will meet again, to make sure that Greece has fulfilled its obligations and to take the necessary next steps.

Finally, the International Monetary Fund (IMF) will also take stock in the second week of next month, before it starts making moves on its side.

Above all, the eurogroup hopes that this meeting will mark the end of two years of uncertainty over Greece by stabilizing its economy and putting in place the conditions needed for its economy to return to growth.