A €30 billion bailout package for cash-strapped Greece has been agreed upon by 16 members of the eurozone. Financial delegates held a conference and arranged the fund at a crucial time as Greece enters a defining week.
Countries from the eurozone have agreed to lend Greece the money, should it need it, at a reduced interest rate, thought to be slightly below 5%. Members of the eurozone will raise the money in accordance to the amount of money they deposit into the European Central Bank. However, this may in turn put increased pressure on countries such as Spain and Ireland as they already have debt problems of their own.
President of the eurogroup and Prime Minister of Luxembourg Jean-Claude Juncker says that the bailout should bring a moment of calm to the current economic storm: “This is the step of clarification the markets are waiting for, it shows there is money behind this” he added that: “No member states will make a loss."
The bailout agreement was not actually requested by Greece and thoughts with Athens are that hopefully it will not be needed. Greece’s Prime Minister George Papaconstantinou released a statement on the matter in which he said: “The Greek government has not asked for the activation of the mechanism, although it is now immediately available. We believe that we will be able to continue to borrow on the markets in an unobstructed fashion”.
It is not yet known what Germany makes of this deal, as they were against a reduced borrowing rate in the prior discussions, under the new agreement Germany could be required to offer up to €6.3billion should Greece request the loan package.
European Union treaty laws state that governments are not to receive subsidised bailouts however Juncker insited this wasn’t the case: “This does not contain any elements of subsidy. This is a mechanism that should encourage Greece to return to normal financing on the markets as soon as possible”.
Even though the Greek Government hopes that they will not have to utilise the package financers around the world fear that to be a pipe dream.