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-	The Greek PM has warned the nation of a collapse in living standards if MPs fail to pass an unpopular austerity bill demanded in return for a 130bn-euro ($170bn; �110bn) bailout.	+	Eurozone finance ministers have agreed a second bailout for Greece after marathon talks in Brussels.
-	In a TV address, Lucas Papademos said Greece was "just a breath away from Ground Zero".	+	Greece is to receive loans worth more than 130bn euros (�110bn; $170bn).
-	The cabinet has approved the measures but five government ministers resigned.	+	In return, Greece will undertake to reduce its debts to 120.5% of its GDP by 2020 and accept an "enhanced and permanent" presence of EU monitors to oversee economic management.
-	Unions are holding a 48-hour strike, and thousands of protesters rallied in central Athens against the measures.	+	Greece needs the funds to avoid bankruptcy on 20 March, when maturing loans must be repaid.
-	Riot police were on standby after clashes on Friday, but the demonstrations were mostly peaceful.	+	After five straight years of recession, Greece's debt currently amounts to more than 160% of its Gross Domestic Product.
-	The austerity measures are being demanded by the eurozone and IMF - they must now be passed by the Greek parliament and approved by European finance ministers.	+	The euro immediately rose on reports of the deal, which was announced early on Tuesday, after 13 hours of talks.
		+	Repayment takes priority
-	Some MPs from the governing parties are expected to vote against the bill, the BBC's Mark Lowen in Athens reports.	+	The deal also means that private holders of Greek debt will take losses of 53.5% on the value of their bonds.
-	But analysts say the package should still have enough support in parliament, because Pasok, the largest party, and its coalition ally New Democracy account for more than 230 deputies out of a total of 300.	+	When all the elements of the exchange are accounted for, the loss to investors is expected to be as much as 70%.
-	Catastrophe fear	+
-	Mr Papademos said the measures would "decide the country's future" and enable it to stay inside the euro.	+	Eurozone leaders and the IMF said in October that Greek debt should be reduced to a more sustainable level of 120% of GDP by 2020.
	Continue reading the main story		Continue reading the main story
-	What went wrong in Greece?	+	Analysis
		+	image of Mark Lowen Mark Lowen BBC News, Athens
-	An old drachma note and a euro note	+	This is in effect uncharted territory for the eurozone - a managed Greek default, with over 50% of the country's private debt being written off. This was not even being considered as an option several months ago.
-	Greece's economic reforms, which led to it abandoning the drachma as its currency in favour of the euro in 2002, made it easier for the country to borrow money.	+
-	The opening ceremony at the Athens Olympics	+	But the Greek people will be sceptical about this bailout. The deal that has been agreed will mean more austerity and spending cuts, and even more pain for Greeks. Many will be concerned that the new measures will kill off prospects of growth and lock the country into a spiral of recession.
-	Greece went on a big, debt-funded spending spree, including paying for high-profile projects such as the 2004 Athens Olympics, which went well over its budget.	+
-	A defunct restaurant for sale in central Athens	+	Greeks say that the country's middle classes who have worked hard and pay their taxes are, unfairly, bearing the brunt of a crisis they did not create. They feel Greece's notorious corrupt politicans and wealthy Greeks who evaded tax are to blame.
-	The country was hit by the downturn, which meant it had to spend more on benefits and received less in taxes. There were also doubts about the accuracy of its economic statistics.	+
-	A man with a bag of coins walks past the headquarters of the Bank of Greece	+	The deal provides for the presence of EU monitors of Greece's economic management as some members doubt Greece's commitment to its spending pledges.
-	Greece's economic problems meant lenders started charging higher interest rates to lend it money. Widespread tax evasion also hit the government's coffers.	+
-	Workers in a rally led by the PAME union in Athens on 22 April 2010	+	Within the next two months, Greece will also have to pass legislation giving priority to debt repayments over the funding of government services.
-	There have been demonstrations against the government's austerity measures to deal with its debt, such as cuts to public sector pay and pensions, reduced benefits and increased taxes.	+
-		+
-	Greek Prime Minister George Papandreou at an EU summit in Brussels on 26 March 2010	+
-	The EU, IMF and European Central Bank agreed 229bn euros ($300bn; �190bn) of rescue loans for Greece. Prime Minister George Papandreou quit in November 2011 after trying to call a referendum.	+
-		+
-	Greece's problems have made investors nervous, which has made it more expensive for other European countries such as Portugal to borrow money.	+
-	Eurozone leaders are worried that if Greece were to default, and even leave the euro, it would cause a major financial crisis that could spread to much bigger economies such as Italy and Spain.	+
-		+
-	Lucas Papademos	+
-	Under Prime Minister Lucas Papademos, Greece is trying to negotiate a big write-off of private debts and secure a second bail-out of 130bn euros ($170bn, �80bn) before a 20 March deadline.	+
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-	"The social cost of this programme is limited in comparison with the economic and social catastrophe that would follow if we didn't adopt it," he said.	+
-		+
-	Savings would be lost, the government would be unable to pay wages or salaries, and imports of fuel, medicine and machinery would be disrupted, he added.	+
-		+
-	Earlier, Greek conservative leader Antonis Samaras said all his party's MPs must vote in favour of the bailout law.	+
-		+
-	Mr Samaras, whose New Democracy party is a member of the governing coalition, said any rebels would face being dropped as parliamentary candidates.	+
-		+
-	Deputy Foreign Minister Mariliza Xenogiannakopoulou, who quit on Friday afternoon, is the most senior defection so far.	+
-		+
-	Her Pasok party, the largest in the coalition, also suffered the loss of a deputy labour minister on Thursday.	+
-		+
-	The austerity cuts include:	+
-		+
-	* 15,000 public-sector job cuts	+
-	* liberalisation of labour laws	+
-	* lowering the minimum wage by 20% from 751 euros a month to 600 euros	+
-	* negotiating a debt write-off with banks.	+
-		+
-	These were presented to a eurozone ministers in Brussels on Thursday evening.	+
-		+
-	But they want a further 325m euros in savings for this year and also insist that Greek leaders give "strong political assurances" on the implementation of the packages.	+

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Revision as of 22:44, 16 January 2013

Eurozone finance ministers have agreed a second bailout for Greece after marathon talks in Brussels.

Greece is to receive loans worth more than 130bn euros (�110bn; $170bn).

In return, Greece will undertake to reduce its debts to 120.5% of its GDP by 2020 and accept an "enhanced and permanent" presence of EU monitors to oversee economic management.

Greece needs the funds to avoid bankruptcy on 20 March, when maturing loans must be repaid.

After five straight years of recession, Greece's debt currently amounts to more than 160% of its Gross Domestic Product.

The euro immediately rose on reports of the deal, which was announced early on Tuesday, after 13 hours of talks. Repayment takes priority

The deal also means that private holders of Greek debt will take losses of 53.5% on the value of their bonds.

When all the elements of the exchange are accounted for, the loss to investors is expected to be as much as 70%.

Eurozone leaders and the IMF said in October that Greek debt should be reduced to a more sustainable level of 120% of GDP by 2020. Continue reading the main story Analysis image of Mark Lowen Mark Lowen BBC News, Athens

This is in effect uncharted territory for the eurozone - a managed Greek default, with over 50% of the country's private debt being written off. This was not even being considered as an option several months ago.

But the Greek people will be sceptical about this bailout. The deal that has been agreed will mean more austerity and spending cuts, and even more pain for Greeks. Many will be concerned that the new measures will kill off prospects of growth and lock the country into a spiral of recession.

Greeks say that the country's middle classes who have worked hard and pay their taxes are, unfairly, bearing the brunt of a crisis they did not create. They feel Greece's notorious corrupt politicans and wealthy Greeks who evaded tax are to blame.

The deal provides for the presence of EU monitors of Greece's economic management as some members doubt Greece's commitment to its spending pledges.

Within the next two months, Greece will also have to pass legislation giving priority to debt repayments over the funding of government services.