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Greek bailout deal reached

February 21, 2012

European finance ministers have agreed on a second bailout package for Greece worth 130 billion euros ($170 billion). The deal will bring government debt in Athens down to 120.5 percent of gross domestic product by 2020.

MF Managing Director Christine Lagarde (L) talks with Greece's Prime Minister Lucas Papademos (R)
Image: Reuters

Eurozone finance ministers have sealed a deal for a new bailout of Greece to save it from a potentially disastrous default, European Union officials said early Tuesday.

After more than 12 hours of talks through the night in Brussels, ministers agreed to give Greece 130 billion euros ($170 billion) in bailout loans. The deal will also bring government debt in Athens down to 120.5 percent of gross domestic product (GDP) by 2020. That is around the maximum that the International Monetary Fund and the eurozone consider sustainable.

We have reached a "far-reaching agreement," which will "secure Greece's future in the eurozone," Eurogroup chairman Jean-Claude Juncker said at a press conference following the meeting.

Immediately after news of the bailout package broke, the euro jumped 0.7 percent to $1.328, revising earlier losses.

The deal comes after Greece's cabinet scraped together an additional 325 million euros in savings over the weekend to round off 3.3 billion euros in cuts, one of the conditions set by the EU in exchange for the release of the bailout.

Brussels had also demanded that Athens make a written commitment to implementing austerity measures after April's parliamentary election.

Greece desperately needs the bailout in order to make debt repayments to the tune of 14.5 billion euros, which mature on March 20.

ccp/pfd (AFP, AP, dpa)