After more than 12 hours of negotiations, Euro zone finance ministers on Monday agreed on a second bail-out deal for Greece. In exchange of 130 billion euros in financial aid, the Greek authorities will have to further cut public spending.
Europe wants to see Greece repaying its debt before funding other government services. As Greek elections are due in April, a strong political commitment was also one of the key elements in reaching an agreement.
For their part, private-sector holders of Greek bonds will take losses of over 53%. The deal also includes what some see as an unprecedented intrusion into Greece’s fiscal powers. EU officials will be permanently based in Athens to monitor the correct implementation of the programme.
But will the austerity measures work? Analysts seem to think that while the bailout will temporarily stop Greece from defaulting, the package seems unlikely to revive Greece’s economy. A leaked report written by the so-called Troika says that it is not clear the package will help Greece come out of the crisis.