The Eurozone leaders have decided to provide a second bailout for Greece worth an estimated £100Bn over the next three decades. In addition, the restructured debt gives Greece a much lower interest rate of 3.5% and more time to pay it back.
Private lenders will also be involved in the financing of this bailout, something which Germany has been insisting upon but which France and the European Central Bank were strongly opposed to. It was feared that calling upon private investment would be seen as a default by international credit agencies which would jeopardise Europe’s economy as a whole. However, it seems that this is a risk that has needed to be taken in order to stabilise Greece. When asked about this risk Nicolas Sarkozy, the French President responded “if the rating agencies are using the word you just used (default), it is not part of my vocabulary. Greece will pay its debt.” So far it appears that the markets are reacting fairly positively.
Greece’s finance minister, Evangelos Venizelos, has described a sense of “great relief” in the wake of the decision. He has also promised to implement strict measures in order to reduce their costs dramatically. At a conference in Athens he stated “(The decision) provides a great relief for the Greek economy, which will gradually be passed on to the real economy.” He continued “But this must in no way means we will relax of our efforts. We must continue implementing our program and remain committed to the great target of meeting budgetary goals.”
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox
About The Author
MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.