Antonis Samaras calls euro-zone debt deal a new day for Greece

Opposition says only a writedown on €340 billion nation owes EU banks can restart growth

PUBLISHED : Wednesday, 28 November, 2012, 12:00am
UPDATED : Wednesday, 28 November, 2012, 4:37am

A bleary-eyed Greek Prime Minister Antonis Samaras welcomed an agreement by international lenders to help cut his country's debt and unblock bailout money to avert bankruptcy.

The biggest opposition party, however, dismissed the deal and criticised Germany for preventing Greece from writing off more of its €340 billion (HK$3.41 trillion) debt.

After 12 hours of talks at their third meeting in as many weeks, euro-zone finance ministers and the International Monetary Fund agreed on measures to reduce Greek debt by €40 billion, opening the way for €43.7 billion euros of rescue loans to be disbursed by early 2013.

"Everything went well," Samaras said at about 3am yesterday.

"Tomorrow, a new day starts for all Greeks."

The first disbursement was set to take place on December 13, said Jean-Claude Juncker, head of the Eurogroup of finance ministers, after the decision.

"We strongly believe in the Greek capacity to recover. The Greek people are courageous people. They are willing to bring their country back on the path of growth," Juncker said.

Mario Draghi, president of the European Central Bank, said markets should pay heed.

"It will certainly reduce the uncertainty and strengthen confidence in Europe and in Greece."

The so-called troika of the European Central Bank, IMF and the European Commission - which is the 27-country EU's executive arm - have twice agreed to bail Greece out, pledging a total of €240 billion in rescue loans - of which the country has received about €150 billion so far. In return for its bailout loans, Greece has had to impose several rounds of austerity measures and submit its economy to scrutiny.

It is predicted that Greece will enter its sixth year of recession shortly, and it has a quarter of its workforce out of a job. There had been fears it might be forced to drop out of the euro zone, destabilising other countries in the process.

Greece's anti-bailout opposition dismissed the agreement altogether, saying it fell short of what was needed to make the country's debt sustainable.

"It's a half-baked compromise, a band-aid on the gaping wound of Greece's debt," said Dimitris Papadimoulis, senior lawmaker of the leftist opposition Syriza party, which is leading in the polls.

Papadimoulis said German Chancellor Angela Merkel was standing in the way of a 50 per cent write-down of Greece's debt, saying that was what Athens needed.

"[The deal happened] under pressure from the narrow-minded, egoistic, short-sighted economic policies of Merkel, who stingily watches over her money," he said.

Greek newspapers were equally split about the deal. Greece's top-selling daily Ta Nea ran the headline: "The first smile for Greece". But Six Days, another daily, called the deal "a disastrous compromise ... holding Greece captive to severe recession and austerity without solving the country's big debt problem".

The political agreement will have to be submitted to parliaments in some countries. After that, the finance ministers plan to hold another meeting to give final approval to the disbursement.

Reuters, Associated Press