European leaders (EU) staved off the possibility of the Greek default by means of an “exceptional and unique solution” last night.
European leaders, along with the IMF, agreed on a €109 billion (£96.2 billion) bailout package for Greece last night that draws on both the private and public sectors.
Greece was offered lower interest rates and extended maturities on the debt after weeks of negotiations between eurozone leaders.
European Financial Stability Facility (EFSF) loans were lengthened to the maximum possible maturity, from 7.5 years to a minimum of 15 and a maximum of 30, with a 10 year grace period.
The loan carries a 3.5% interest rate, described as “close to, but not below, the EFSF funding cost.”
The private sector will contribute an estimated €37 billion to the bailout. Opinions across the eurozone were previously divided on this point.
Angel Gurria, the secretary general of the Organisation for Economic Cooperation and Development (OECD) described private sector involvement as “necessary” in the early stages of negotiations, while the ECB president Jean-Claude Trichet has argued that such involvement is far from normal.
Christine Lagarde, the managing director of the IMF, was positive on the news of an agreement; ““The IMF welcomes the important steps taken today by the leaders of the eurozone and the EU institutions. These measures provide significant support to growth and financial stability in Greece and in the eurozone.”