March 1, 2012 / 4:36 PM / 6 years ago

Eurogroup provisional approval for new Greek package

<p>IMF Managing Director Christine Lagarde (L), Luxembourg's Prime Minister and Eurogroup chairman, Jean-Claude Juncker (C) and Germany's Finance Minister Wolfgang Schaeuble talk together at the start of a Eurogroup meeting ahead of a two-day EU leaders summit in Brussels March 1, 2012. REUTERS/Francois Lenoir</p>

BRUSSELS (Reuters) - Greece has taken all the legal action needed to secure a second bailout from the euro zone countries, Eurogroup Chairman Jean-Claude Juncker said on Thursday, and ministers are now waiting for the completion of the private second bond swap.

“All required legislation by the parliament and the ministerial cabinet has been adopted, and a few pending implementing acts should be completed shortly,” Juncker said in a statement after a meeting of euro zone finance ministers, listing steps Greece had taken on fiscal consolidation, pension reform, financial sector regulation and structural reforms.

“This will allow the Greek adjustment effort to regain momentum, which - together with a rigorous implementation of the agreed policy package for the new programme - constitutes the basis for putting the public finances and the economy of Greece back on a sustainable path.”

However, a bond exchange in which private sector holders of Greek debt will swap more than 200 billion euros worth of bonds for new ones worth half that amount must still be completed before ministers can give their final approval to a 130 billion euro programme of assistance for Athens.

Included in the programme is 30 billion euros of “sweeteners” designed to smooth the bond-swap process. That process can now go ahead, with the euro zone’s EFSF bailout fund raising the funds to carry out the operation.

Juncker said ministers also agreed on a backstop facility for the recapitalisation of Greek banks in case of financial stability concerns. No figures were given, but Greece is expected to receive between 23 billion and 40 billion euros for bank recapitalisations.

However, the bond exchange must be completed first. It opened on February 24 and is scheduled to close on March 8.

“The Eurogroup, however, reiterates that a successful PSI operation (bond exchange) with high participation and a final positive assessment of the complete set of prior actions are necessary conditions both for the disbursements of these EFSF bonds and for the second programme,” Juncker said.

“The Eurogroup therefore looks forward to a high participation of private creditors in the debt exchange.”

Writing by Luke Baker

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