Private banks will contribute on a voluntary basis in the second bailout estimated between 60 and 65 billion euros. The share of the euro zone will be 20 billion and 10 billion from the IMF.
The financial horizon of Greece cleared with the finalization of a new rescue plan, estimated at between 60 and 65 billion euros by 2014, involving the eurozone, the IMF, Greece and banks. After a meeting with Greek Prime Minister, Luxembourg, the head of the Eurogroup Jean-Claude Juncker, announced Friday, “an additional funding for Greece, in exchange for strict conditions.”
The emissaries of the “troika”(EU, IMF and ECB) showed green light Friday to pay “probably early July, ” the fifth installment of the 110-billion-loan made last year or 12 billion euros. Troika calls in return an “acceleration of structural reforms and budget.”
Details of the new support plan for Greece were not disclosed, but the broad outlines are known. Half of the envelope will come from new loans in the euro area (20 billion) and IMF (10 billion). A quarter of the effort will fall to Greece. The rest will be borne by the private sector “on a voluntary basis,”said Jean-Claude Juncker Friday.
Expected new sacrifices in Greece
“On this basis, it is clear that there will be no exit for Greece from the euro area,” assured the head of the Eurogroup. On Friday, the markets welcomed the news: Greek bond yields were down sharply, the Athens Stock Exchange hit a record high at over 4.42% in the afternoon, while the euro climbed to $ 1.46, the highest since the beginning of the year.
Financiers, however, remain cautious, particularly about the involvement of banks forced march. “It is unclear what kind of incentives will persuade investors to buy debt Greek long-term interest rate close to that of Greece itself does not, “note analysts at Capital Economics . Friday, Jean-Claude Juncker has ensured that Greece was ready to create a privatization fund, which should give lenders insurance on collateral.
Greek side, the state has undertaken to save 6.4 billion euros more by the end of 2011. These include new sacrifices, greater downsizing in the public service, cuts on wages, hardening the fight against tax evasion, the VAT increase from 13 to 23%.
“New loan means more rigor” said Yannis Panagopoulos, the union president of the private (GSEE). “We sell the country’s heritage and we bled the people. And this is only the beginning. The consequences will be terrible “. Several thousand people are expected in the streets of Athens on Saturday.