November 27, 2012
Eurozone governments could be forced to accept losses on their rescue loans to Greece after Monday’s late-night deal to overhaul its bailout failed to agree how to reach new debt targets for the struggling country, according to documents seen by the Financial Times.
After three gatherings in two weeks, eurozone finance ministers agreed to release a long-delayed €34.4bn aid payment to Athens. But the series of measures agreed, which could relieve Greece of billions of euros in debt by the end of the decade, do not go far enough.
The measures to be implemented immediately as part of the deal will only lower Greece’s debt levels to 126.6 per cent of economic output by 2020, not the 124 per cent announced by eurozone leaders, according to the documents and senior officials.
Instead, eurozone governments postponed further debt relief – amounting to 2.7 percentage points of gross domestic product – to a later date, when Greece begins taking in more money than it spends, not counting interest payments.