Euro Zone Crisis
The euro zone crisis was triggered in 2009 when Greece's debts, left by its previous government, reached a record 300 billion euros, leaving the southern European economy with debt levels more than four times higher as a proportion of gross domestic product than the official euro zone cap of 60 per cent of GDP. Since the original problems were uncovered, Greece has been bailed out twice, and lenders have also had to rescue Ireland and Portugal. In the latter half of 2012. Cyprus also required a bailout.
Euro zone grants multi-billion euro lifeline for Greece
Athens to get staggered payments over course of the year
Greece secured a 6.8 billion euro (US$8.7 billion) lifeline from the euro zone on Monday, officials told reporters, but was told it must keep its promises on cutting public sector jobs and other reforms in order to get all the cash.
The deal, which spares Greece defaulting on debt that falls due in August, will see Athens drip fed support under close watch from its international creditors to drive through unpopular reforms.
Under the terms of the deal, euro zone finance ministers agreed to make staggered payments of aid to Greece starting with a 2.5 billion euro instalment from euro zone countries in July, said officials close to the talks.
The agreement foresees a further payment from euro zone countries of 500 million euros in October.
Central banks in the Eurosystem will contribute 1.5 billion euros in July and 500 million euros in October, the officials said. The International Monetary Fund will give 1.8 billion euros in August.
“That’s the way it will be done,” said one of the officials.
After more than three years on life support from Europe, Greece’s governing coalition is split over how to meet the demands of its bailout programme, putting the country centre stage and threatening to reignite the euro zone debt crisis.
But a week of talks, culminating in promises to reform the public sector, appeared to convince international lenders – the International Monetary Fund, the European Commission and the European Central Bank – that Greece is committed to rebuilding its economy.