In the early hours Tuesday morning, eurozone finance ministers managed to secure a new bailout deal worth 237 billion euro ($314 billion) that should keep Greece in the eurozone.
The deal was brokered in Brussels between the governments, the European Union, the International Monetary Fund, and private creditors after what was described as a marathon session lasting over 13 hours.
“In the past two years and then this night, I have learned that marathon is indeed a Greek word. But in the end we came to an agreement,” said eurozone Vice President Olli Rehn in a statement.
The deal will see private holders of Greece’s debt incurring losses of 53.5 percent on the nominal value of their bonds. As part of the deal Greece will need to reduce its public debt from 160 percent of its GDP to 120.5 percent by 2020.
“It is a far reaching and important agreement … which will substantially reduce the debt burden of Greece and will help to reform the economy and administration so as to return to growth and creating jobs,” said Vice President Rehn who insisted that the program is supported by “a very substantial contribution by the private sector.”
Greece’s unemployment has soared over the past two years, under its economic crisis and the subsequent austerity measures, to 20 percent and its economy contracted by 7 percent over the last quarter of 2011.
Under the bailout program Greece’s finances will be subjected to permanent monitoring by an on-the-ground European Commission task force.
While Greek Finance Minister Evangelos Venizelos said the deal had avoided a nightmare scenario, Greeks took to the street on Tuesday to protest, with trade unions calling on additional protests for the rest of the week.
Christine Lagarde, managing director of the International Monetary Fund, said in a statement that the success of the bailout package will depend on the full and timely implementation of the measures by Greece.
Over the past weeks worries have been increasingly raised over whether Greece is willing and able to fulfill the commitments tied to the package. As part of the package Greece’s government has one week to approve 3 billion euros ($3.9 billion) in spending cuts.
“The measures being taken are essential and in many cases long overdue. There is no alternative to fiscal consolidation and to structural reform in Greece,” said European Commission President José Manuel Barroso, in a statement Tuesday.