After eight hours of negotiation, the agreement was finally reached. The seventeen leaders of the Eurozone, meeting yesterday in Brussels for an extraordinary summit, gave the green light to a second maxi-package worth around 160 billion euros to save Greece from default. A sort of new Marshall Plan, as they themselves have defined it, relying on the memory of what the United States did for Europe after the war. “We have decided on a common response – said Herman Van Rompuy, president of the European Council, at the end of the summit -. Our goal is to improve the sustainability of the Greek debt, stop the risk of contagion, strengthen the tools for managing the crisis".
Here are the main measures envisaged in the plan in schematic form:
109 BILLION FROM EU AND IMF BY 2014
This second tranche of aid adds up to the first of 110 billion that arrived last year.
106 BILLION FROM PRIVATE INDIVIDUALS IN THE PERIOD 2011-2019
The intervention of private individuals (banks, insurance funds and pension funds) will arrive "on a voluntary basis" and should include a net intervention of 37 billion and a buy-back of 12,6 billion (these last two figures, added to the 109 billion which will arrive through public hands, allow us to reach the fateful quota of "approximately" 160 billion). In addition to the buy-back, the financial sector will also support Athens with swaps and rollovers on portfolio securities. This part of the plan could trigger the selective default judgment by the rating agencies.
EFSF TO BUY GREEK BONDS ON THE SECONDARY MARKET
The European Financial Stability Facility will be reformed in order to be able to buy government bonds (not only of countries in crisis) on the secondary market. Furthermore, in the event of a selective default, the EFSF will guarantee loans to Greek banks from the ECB with a sum of between 20 and 30 billion euros.
BEST CONDITIONS FOR LOANS
The duration of the loans will be extended from the current seven and a half years to a minimum of 15 years, which may be extended up to 30. The interest rate will be lowered from 4,5% to 3,5%.
STRUCTURAL FUNDS
Employment and growth in Greece will be favored through a new use of European structural funds for one billion euros.
Attachments: Eurozone_official_declaration.pdf
