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Fourth Greek crisis meeting – what are the terms for Greece New Deal?

DURING last night’s  Euro zone finance ministers and the International Monetary Fund (IMF) talks in Brussels, European leaders clinched agreement to a deal that will allow Greece to get almost 44 billion more Euros in 3 tranches.

“Greece has shown that it is serious about reform” and has kept to its commitments, European Commissioner for Monetary Affairs Olli Rehn said at a news conference after the meeting.

“Greece has already come a very, very long way,” Rehn said.

According to the Eurogroup statement, the parties believe that the “necessary elements are now in place” for member states to approve a European Financial Stability Facility (EFSF) disbursement to Greece of €43.7 billion ($56.8 billion) in several tranches, with the formal go-ahead seen by Dec. 13 — a date which BNP Paribas noted was one day ahead of a round of key Greek treasury-bill redemptions.

We summarize in bullets about “Greece New Deal”:

Euro-zone finance ministers, the European Central Bank (ECB) and the International Monetary Fund — Greece’s three main creditors, often called “the Troika” — reached an agreement.

– Goal is to get Greek debt down to 122% of GDP in 2020.

– Greece gets more breathing space, goal of 4.5 percent of Gross domestic product (GDP) primary surplus is postponed from 2014 to 2016.

– Greek loan rates are lowered by 100 basis points.

–  Cutting guarantee costs for Greece’s EFSF loans by 10 basis points.

Maturity on loans extended by 15 years (reducing payments).

Lower EFSF fee.

Public debt tender purchases of Greek sovereign debt may also take place

– Other countries to forgo profits on Greek debt that has been purchased by the ECB.

Greece may do a debt buyback.

–  Possibly deferring interest payments on EFSF loans by 10 years.

“All initiatives decided upon today will bring Greece’s public debt clearly back on a sustainable path,” Luxembourg Prime Minister Jean-Claude Juncker told reporters after chairing a meeting that ended early today. “This has been a very difficult deal.”

Euro region finance ministers persuaded a skeptical International Monetary Fund that Europe has a formula for rescuing the country that triggered the debt crisis.


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