Skip to main content
France

French Finance Minister Baroin hails Greek debt deal as good news

French Finance Minister François Baroin has welcomed the historic debt swap which will open the way for an urgent second bailout to save Greece from bankcruptcy. Private creditors tendered bonds amounting to 83.5 per cent of debt covered by a deal to cancel half the amount owed - a write-off worth 107 billion euros on the basis of full acceptance. 

Reuters/Benoit Tessier
Advertising

“This is good news…it will avoid default and as result the risk of bankruptcy which will allow us to achieve the objectives that we have set,” he said.

IMF head Christine Lagarde, just before the official take-up rate was announced, said the risk of crisis in the eurozone has been "removed" for now.

"As we speak, it looks like it's going through," Lagarde said that the "real risk of a crisis, of an acute crisis, has been, for the moment, removed."

The success of the debt swap is a vital step for Greece to be able to avoid a default as early as 20 March when it has to repay some debt. Default would be catastrophic for Greece and could cost the eurozone one trillion euros and send shockwaves around global financial markets.

It meets a central condition laid down by the EU-IMF for a far bigger overall bailout for Greece.

Eurozone finance ministers are to review the take-up figure for the swap in a conference call later on Friday.

The participation is higher than the 75 per cent threshold Greece had said it wanted to proceed with the swap and the Athens now intends to activate so-called collection action clauses that will force holdouts to also join the deal.

Once enacted, the clauses are expected to boost final participation in the debt swap to 95.7 percent, the ministry said.

The International Institute of Finance, a global bank association which had helped broker the deal, on Friday welcomed the result which it said would give Greece "breathing space" to implement tough reforms.

"The very strong and positive result provides a major opportunity now for Greece to move ahead with its economic reform program, while strengthening the Euro area's ability to create an economic environment of stability and growth," said Deutsche Bank head Josef Ackermann, who also chairs the IIF.

The EU and IMF have said that a participation rate of 95 per cent is necessary to reduce Greek debt to a sustainable level of 120 per cent of gross domestic product in 2020.

Failure to reach a deal would have increased the danger of a disorderly default that the IIF warned could cost eurozone nations one trillion euros.

 

Daily newsletterReceive essential international news every morning

Keep up to date with international news by downloading the RFI app

Share :
Page not found

The content you requested does not exist or is not available anymore.