Greek Bankruptcy Averted for Now

A man walks past one of the many pawn shops that have opened in debt-crippled Greece over the past three years, in central Athens, on Monday, Nov. 26, 2012.
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Current forecasts have Greece's debt level at 144 percent of its output by 2020. The IMF had originally said it would only agree to the bailout program if the country's debt was at 120 percent by then. Tuesday's meeting reached a compromise between the IMF and the euro ministers where Greece will now have to reach a 124 percent debt load by 2020 and below 110 percent by 2022. The difference between the current forecast and the new 2020 target would involve a cut in Greece's debt load of some €40 billion.

To reach this, the meeting agreed on a raft of measures. These include:

—A cut of 100 basis points on the interest rate charged to Greece by other eurozone member states — excluding those that are also receiving bailouts.

—A 15-year extension of the maturities of loans from other countries and the eurozone's bailout fund, the European Financial Stability Facility, and a deferral of interest payments by Greece on EFSF loans by 10 years.

— A program whereby Greece could buy back some of its debt from private investors. The details of this program are still to be agreed by the eurogroup and IMF.

The deal still requires the authorization of a number of Parliaments in Europe, including Germany's, where patience with repeated Greek rescues has been running low.

However, Rainer Bruederle, the caucus leader of the Free Democrats, the junior coalition partner, said he expects broad approval this time on Thursday.

"Conditions have been put together which maintain a tough mechanism toward Greece, but still save us from a collapse of the Greek economy possibly having consequences that could pull down the whole of Europe," he said.

Greek newspapers were divided on whether the agreement would give the country breathing space to right its economy, or keep it trapped in years of recession and austerity.

Broad-circulation "Ta Nea" daily argued in an editorial that the deal affords Greece "a last chance" to escape the crisis.

The leftwing "Efimerida ton Syntakton" carried the headline "A poisonous (loan) installment," arguing that the agreement "condemns Greek society to a slow death."

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Pylas contributed from London. Geir Moulson in Berlin also contributed.

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