February 21, 2012
“I have learnt that marathon is indeed a Greek word.” Thus spoke Olli Rehn, the European monetary affairs commissioner, at the end of a 14-hour negotiating session that produced a second bailout package for Greece this morning.
This had been agreed in principle at a European summit in July last year. But political turmoil in Greece, hesitation in the euro zone—and an ever-worsening fiscal hole caused by an ever-deepening recession—made the deal elusive for months.
It was concluded before dawn this morning after finance ministers, the European Central Bank and representatives of private creditors squeezed the numbers to produce a package that was deemed both politically acceptable to creditors and provided Greece with something it reckoned to be sustainable.
As explained in my earlier post, the negotiators were working within self-imposed constraints. According to the final statement, the deal is expected to bring down Greece’s debt ratio to 120.5% of GDP in 2020, while requiring no more than €130 billion ($173 billion) in additional finance in the coming two years. To square the circle, ministers have applied the file to several aspects.
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