Euro zone leaders say they have struck a deal to tackle the bloc’s chronic debt crisis.
After a day of emergency talks in Brussels, EU heads confirmed a new bailout for Greece. That will include involvement from the private sector. Another key element was greater powers and flexibility for Europe’s financial rescue fund.
EU Council President Herman Van Rompuy said: “We improved the Greek debt sustainability, we took measures to stop the risk of contagion and finally we committed to improve the euro zone’s crisis management”
Euro zone chiefs described the latest measures to help Greece as a European-style ‘Marshall plan’ of public investment to help revive the Greek economy.
Greek Prime Minister George Papandreou said: “We now have a programme and a package of decisions which create a sustainable path for Greece, a sustainable debt management for Greece and this in the end of course will mean not only the funding of the programme, but it will also mean the lightening of the burden on the Greek people”.
Along with Greece, lending terms to Ireland and Portugal will be eased, with private investors voluntarily swapping Greek bonds for longer maturities at lower interest rates.
Leaders also promised to stand by Greek banks should rating agencies declare that the agreement amounted to a limited default by Athens.