Helsinki Times

Greece receives bailout, but official lenders think deal won’t work

AFTER many delays, officials have agreed to a second bailout for Greece. The terms include 130 billion euros in new loans, as well as about 107 billion euros of old debt being written off. Nevertheless, a leaked memo from the IMF, ECB and European Commission shows that some in the troika believe the current plan will likely fail.

Under the new bailout, private creditors will lose about 70 per cent of the value of their bonds. Greece will be subjected to permanent monitoring, must amend its constitution to give priority to debt repayments, and will be required to set up a segregated account to service its debt.

The head of the eurozone ministers, Jean-Claude Juncker, was optimistic. “We have reached a far-reaching agreement on Greece’s new programme… to secure Greece’s future in the Euro area,” he said.

In Finland, MP Kimmo Sasi told Yle he believes no more loans to Greece would be forthcoming. Finance Minister Jutta Urpilainen said that the 130 billion euro deal should be sufficient, according to Kauppalehti.

However, a leaked document shows that privately the official lenders do not think the current bailout will be enough.

“The results point to a need for additional debt relief from the official or private sectors...” reads the report. “Prolonged financial support on appropriate terms by the official sector may be necessary… Given the risks, the Greek program may thus remain accident-prone, with questions about sustainability hanging over it.”

DAVID J. CORD
HELSINKI TIMES
LEHTIKUVA - AFP PHOTO - GEORGES GOBET