Greece hopes debt deal will secure future in eurozone

Greek and world leaders Tuesday welcomed as “historic” the approval of a second bailout for Greece, involving an additional 130 billion euros in loans and a write-down of more than 100 billion euros of the country’s debt. The deal was clinched following more than 14 hours of tough negotiations at a Eurogroup summit in Brussels where ministers wrangled until the early hours, exacting concessions from private bondholders who agreed to take a loss of 53.5 percent on the face value of their bonds. Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos appeared tired but relieved when they finally gave a press conference at about 7 a.m. Papademos said the agreement would allow the country to “move forward with stability, to reduce uncertainty and boost trust in the Greek economy in order to create better conditions.” But he said the measures attached to the deal would need to be enforced. “We don’t have the luxury of delaying implementation.” Later in the day, addressing a cabinet meeting, Papademos emphasized the need for legislation outlining the measures -- as well as the debt swap agreement and the collective action clauses that would oblige reluctant bondholders to take a haircut -- to be voted into law before a European Union summit on March 1 and 2. The premier said that if all measures are enforced as foreseen, the country should start returning to growth from 2013. On the sensitive issue of the permanent presence of foreign inspectors in Athens, Papademos said that eight officials were already in the capital and that this “technical support would be reinforced.” Earlier in the day, Venizelos told a press conference in Athens that the new debt deal had “averted a nightmare scenario.” “It is the most significant deal in Greece’s postwar history,” he said. He appealed to Greeks who have withdrawn their savings from banks to put them back. The deal was hailed by a host of foreign officials in Europe and beyond. Eurogroup Chairman Jean-Claude Juncker described the agreement as “far-reaching,” adding that it would “secure Greece’s future in the euro area.” European Economic Affairs Commissioner Olli Rehn said the deal was “an essential step further for Greece and for the euro area as a whole.” Christine Lagarde, managing director of the International Monetary Fund, was also upbeat. “The combination of ambitious and broad policy efforts by Greece, and substantial and long-term financial contributions by the official and private sectors, will create the space needed to secure improvements in debt sustainability and competitiveness,” she said. Later in the day US President Barack Obama telephoned German Chancellor Angela Merkel to hail the “positive steps” taken by the European Union to appease the debt crisis, a White House spokesman said.  

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