Eurozone agrees second Greek bail-out

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Series Details 21.2.12
Publication Date 21/02/2012
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Eurozone Finance Ministers reached a long-delayed €130bn second bail-out for Greece early on the 21 February 2012 after strong-arming private holders of Greek bonds to take even deeper losses than they had accepted in January 2012.

'The new programme provides a comprehensive blueprint for putting the public finances and the economy of Greece back on a sustainable footing', said Jean-Claude Juncker, chairman of the Eurogroup of Finance Ministers.

Both Mr Juncker and Christine Lagarde, Managing Director of the International Monetary Fund, emphasised at a post-meeting press conference that Greece still had to live up to a series of 'prior actions' by the end of February 2012 before eurozone governments or the IMF can sign off on the new programme.

In addition, the bail-out would come with tough new terms, including a permanent team of monitors in Greece to ensure Athens lived up to the terms of the bail-out deal and an escrow account which Greece would ensure always held three months worth of debt payments. The escrow account would be temporary, however, and Athens had agreed to change its constitution to make debt repayment the top priority in government spending.

Separately, a 'strictly confidential' report on Greece’s debt projections prepared for eurozone finance ministers in February 2012 revealed Athens’ rescue programme was way off track and suggested the Greek government might need another bail-out once the second rescue of February 2012 ran out.

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