Greece to receive new 109-billion bailout

23rd July 2011, Comments 0 comments

The 17 countries of the Eurozone have agreed a 109-billion-euro bailout plan for Greece that will run until 2014. Banks and other private organisations will contribute 37 billion euros to the bailout.

Money from the euro emergency fund will also be used to buy Greek government bonds at a reduced rate, pushing the private sector’s share to around 50 billion euros. It will increase by tens of billions of euros up to 2020.

Good news Dutch Prime Minister Mark Rutte says he is pleased with the agreement, adding that it is good news for Dutch savings and pensions. He says the new bailout plan is necessary to prevent the Greek debt crisis from spreading to other Eurozone countries.

Increased flexibility The Eurozone nations have also agreed to a more flexible use of the euro emergency fund. The fund's 750 billion euros can in future also be used to buy government bonds of other Eurozone countries in financial difficulties. Countries which are not yet in acute difficulties may also request assistance from the fund.

Stricter budget rules The Eurozone leaders want to reach agreement as quickly as possible with the European Parliament about stricter measures to be imposed on EU countries that violate budgetary rules.

The European Parliament is involved in a dispute with a number of member states over the issue because it wants to introduce much stricter rules some countries - France in particular - are willing to accept. Mr Rutte says he is unable to predict whether the European Parliament’s demands will be met in full, but adds that the Netherlands supports its position.

Tough Dutch stance European Commission President José Manuel Barroso says he is pleased with the Greek bailout agreement, which took weeks of difficult negotiations to achieve. The main point of dispute was the participation of the private sector.

Germany, the Netherlands and some other countries demanded that the banking sector make a contribution so taxpayers would not have to finance the entire bailout. Other Eurozone countries were opposed to this plan, fearing an adverse response from the financial markets. The Netherlands adopted a very tough stance right up to the end. “I did not come here for the pleasant company,” Mr Rutte commented after Thursday's summit.

Greek Prime Minister George Papandreou is also happy with the deal. The Greek people will now get some relief, he said.

© Radio Netherlands Worldwide

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