Greece has avoided imminent bankruptcy after its international creditors finally agreed to vital loans, but its economic distress is still likely to drag on for years.
After three weeks of negotiations, Greece’s euro partners and the International Monetary Fund agreed to release the payments and introduce measures designed to reduce its massive debts to a more manageable level within a decade. These include reducing the interest rates Greece has to pay on the loans and a bond buyback program.
Prime minister Antonis Samaras hailed the agreement as a victory that heralds “a new day for all Greeks”, but the reaction in the markets were more cautious.
Greece’s public finances spiralled out of control. The country is predicted to enter its sixth year of recession and is weighed down by an unemployment rate of 25 per cent.