EUROZONE FINANCE MINISTERS have agreed a second bailout for Greece worth €130 billion after more than 12 hours of negotiations which ran throughout the night.
The deal is designed to avoid the risk of Greece defaulting next month and contains strict rules for Greece to control its finances.
Under the terms of the new agreement Greece’s creditors have to agree to accept deeper losses on their debts. The European Commission will have a permanent presence on the ground in Greece to monitor how the economy is managed.
Greece has undertaken to reduce its debts to 120.5 per cent of its GDP by 2020 – twice the amount permitted by the fiscal compact.
Minister Brian Hayes who attended the meeting of Eurozone finance ministers said on RTE’s Morning Ireland this morning that the deal was “significant” and it would bring “clarity” to the situation in Greece.
European finance ministers this morning said that the deal is a blueprint for putting the public finances and the economy of Greece onto a sustainable footing, which will safeguard financial stability in Greece and in the euro area as a whole.
Greece will introduce a legal framework in its constitution to ensure that priority is granted to debt servicing payments. The country will also introduce a new mechanism to monitor the money that is to be used to service the country’s debt.
Greece’s two coalition parties have given assurances that the austerity programme will continue to be implemented regardless of the outcome of the upcoming general election.
Eurozone finance ministers said they were aware of the “significant” efforts already made by Greek citizens in accepting austerity programmes but that further major efforts by Greek society are needed to return the economy to sustainable growth.
Head of the IMF Christine Lagarde welcomed the bailout package and said it will pave the way for a “gradual” resumption of economic growth for Greece.
Yesterday president of the Eurogroup Jean-Claude Juncker stressed that Greece is likely to stay within the eurozone, saying that it would be a “bad solution” for both Greece and the euro itself if the country left the single currency market.