Euro finance ministers finally set to agree second Greek bailout
THE GREEK government hopes Eurozone finance ministers will approve its €130bn (£108.1bn) bailout package this afternoon, bringing to a close months of tense negotiations in which Greece has struggled to find a way to avoid defaulting on its debts.
There are also hopes of finalising a deal with private creditors to swap a total of €200bn of bonds for 30-year notes of a lower value, as well as cash worth 10-15 per cent of investors’ holdings, resulting in a haircut of around 70 per cent for bondholders.
The swap is now expected to take place between 8 and 11 March, allowing Athens to pay the €14.5bn of repayments due on 20 March.
Overall, Greece hopes to reduce its debts from 160 per cent of GDP now to a more manageable 120 per cent by 2020 – though the IMF, ECB and European Commission last week estimated it will in fact hit 129 per cent.
Greek PM Lucas Papademos yesterday travelled to Brussels for the meeting, leaving a crowd of a few thousand protesting in Athens – far smaller than the vast demonstrations that shook the capital a week ago, leaving dozens of buildings on fire.
The bailout is conditional on Athens cutting its budget deficit and reforming labour markets – and political party leaders have been made to sign up to such a programme ahead of the general election which is expected to take place in April.
German finance minister Wolfgang Schäuble yesterday urged Greece to accept his offer of officials to help reform the country’s notoriously weak tax collection system.