February 21, 2012
The Eurogroup of finance ministers declared that "ensuring debt sustainability and restoring competitiveness" are the goals of the second bailout for Greece. The unspoken aim is to ensure there will be no chaotic default on 20 March, when a €14.4bn (£12.1bn) bond repayment falls due.
The package envisages pain on all sides: for Greece, for the private-sector lenders to Greece, and for the official lenders to the country, such as the European Central Bank.
As before, the ambition is to reduce Greece's debt-to-GDP ratio from its current level of 160% to roughly 120% by 2020. The new package follows the Greek parliament's recent approval of an extra €325m of spending cuts – including deep cuts to pension payments – to fill a gap in the €3.3bn of extra budget savings this year which the EU and IMF had demanded.
The main elements of Tuesday's agreement are:
1. Greece will have to accept non-Greek inspectors in Athens
European monitors, "an enhanced and permanent presence on the ground in Greece" as the statement put it, will move into Athens ministries.
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