Greek deal just the start

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Greek deal just the start

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Even if there is smooth implementation of the latest Greek rescue deal economists have said it will take a decade or more to stabilise the country’s finances and get its debt down to a manageable level.

To reach this point many different elements have had to come together.

The European Union and the International Monetary Fund had to be satisfied Athens is doing enough to justify the latest 130 billion euro bail-out.

One crucial element is that 100 billion euros of debt is being written off via a restructuring involving private-sector holders of Greek government bonds.

The 3.3 billion euros of cuts include trimming government payrolls by 150,000 by 2015.

The financial markets are getting fed up with how long it has taken to even get this far and, like Brussels, they remain sceptical.

But Financial analyst Nikos Christodoulou said: “There is not a lot of trust that we’ll reach our targets this year, such as the deficit target which was originally around 5.4 percent of GDP. But I believe that with significant efforts we can approach this target, and if all goes well with privatisation, there can be a limit to the debt.”

The European Central Bank also has a vital role to play in making this deal work.

It could decide to forgo the profit on around 40 billion euros of Greek government bonds it is holding to help ease Athens’ debt burden.