22 Jul 2011

Agreement on Greek crisis at summit meeting

4:04 pm on 22 July 2011

Eurozone leaders have reached a new agreement on tackling the Greek debt crisis.

The BBC reports they include debt restructuring and an expansion of the European bail-out fund.

According to President Nicolas Sarkozy of France, the new bailout will also involve private lenders for the first time.

He says they will provide 135 billion euros ($US194 billion, £120.5 billion) over 30 years to Greece.

That's in addition to 110 billion euros previously granted a year ago.

Banks and other private investors will contribute some 37 billion euros.

European Commission president Jose Manuel Barroso says interest rates for loans to Greece are to be reduced, and their duration will be extended.

Easier terms will also be applied to the rescue loans for Ireland and Portugal.

A key element of the package is an expansion of the role of the European bailout mechanism, the European Financial Stability Facility so it can act more freely.

European Council President Herman Van Rompuy said: ''Reform of the EFSF will make it more flexible and effective. We do not now have to wait for substantial damage to occur before we can intervene.''


Earlier, a statement said: ''Greece is in a uniquely grave situation in the euro area.''

As well as allowing for investors to take losses on some of the Greek debt, the statement also allowed for the expansion of the role of the current European rescue fund and a debt swap. The BBC reports this could help other struggling nations like Portugal.

Athens has already implemented a number of wide-ranging austerity measures. Earlier this month, it agreed to further drastic action to cut its debt.