Reuters/New York Times
March 12, 2011
European leaders agreed on Saturday to strengthen the euro zone bailout fund, make its loans cheaper and lower the interest rate on loans extended to Greece, a move to get on top of the year-long debt crisis.
In a bold series of steps that may help to calm some of the pressure in financial markets, the leaders of the 17 countries that share the European single currency said they would increase the guarantees they pay into the European Financial Stability Facility, allowing its capacity to be increased to the full 440 billion euros, from a current level of around 250 billion euros.
They also agreed to lower the interest rate and lengthen the maturity on loans extended to Greece, reducing the rate by 100 basis points to bring it into line with IMF lending. The term on the 110 billion euros of EU/IMF loans was lengthened to 7.5 years from three, giving Athens more time to repay.
"Pricing of the EFSF should be lowered to better take into account debt sustainability of the recipient countries," Herman Van Rompuy, the president of the European Council, told reporters after the summit of the leaders concluded.
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