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Archive for Tuesday, February 21, 2012

EU diplomat: Bailout deal for Greece reached

February 21, 2012

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— After more than 12 hours of talks, the countries that use the euro reached an agreement early today to hand Greece 130 billion euros, or $170 billion, in extra bailout loans to save it from a potentially disastrous default next month, an European Union diplomat said.

The euro surged as the news broke, climbing 0.7 percent to $1.328 within minutes. While much depended on the details of the deal, a final agreement on the bailout for Greece will take some pressure off the 17-country currency union, which has been battling a serious debt crisis for two years.

The deal — details of which were still being worked out by European finance ministers in an all-night session in Brussels — was expected to bring Greece’s debt down to 120.5 percent of gross domestic product by 2020, according to the official. That’s around the maximum that the International Monetary Fund and the eurozone considered sustainable.

The diplomat spoke on condition of anonymity because a formal announcement was pending.

The country needs the 130 billion euro bailout so it can move ahead with a related 100 billion euro, or $130 billion, debt relief deal with private investors. That deal needs to be in place quickly if Athens is to avoid a disorderly default on a bond repayment March 20.

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