Euro Zone Strikes Deal on 2nd Greece Bailout Package

Business » FINANCE | October 27, 2011, Thursday // 09:00
Bulgaria: Euro Zone Strikes Deal on 2nd Greece Bailout Package Italian PM Silvio Berlusconi, Greek PM George Papandreou and President of the Euro group Luxembourg`s PM Jean-Claude Juncker (R) at the start of the EU summit , 26 Oct. Photo by EPA/BGNES

Eurozone leaders reached a deal with private banks and insurers for them to accept a 50% loss on their Greek government bond as a part of the efforts to relieve the country's debt burden and contain the euro zone crisis.

The measure aims at cutting Greece's debt burden by EUR 100 B, reducing its debts from the current 160% of GDP to 120% of GDP by 2020.

The decision was announced early on Thursday after marathon talks involving bankers, heads of state, central bankers and the International Monetary Fund.

The the eurozone will also offer credit enhancements worth EUR 30 B to the private sector, aiming to complete negotiations on the package by the end of 2011.

The value of the new Greek package would be EUR 130 B - up from EUR 109 B when a deal was last struck in July, EU sources have revealed, as cited by international media.

"The summit allowed us to adopt the components of a global response, of an ambitious response, of a credible response to the crisis that is sweeping across the eurozone," French President Nicolas Sarkozy declared before reporters afterwards.

Greek Prime Minister George Papandreou praised the deal, saying: "We can claim that a new day has come for Greece, and not only for Greece but also for Europe."

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Tags: credit enhancements, package, International Monetary Fund, debt crisis, greece, banks, euro zone, debt crises, Eurozone, EU

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