By Paul Taylor and Noah Barkin
BRUSSELS Dec 13 The euro zone agreed on
Thursday to provide nearly 50 billion euros ($64 billion) in
long-delayed aid to Athens, prompting its Prime Minister Antonis
Samaras to declare an end to talk of a Greek exit from the
The deal averts a catastrophic default and secures Greece's
survival in the euro zone after months of doubt and political
turmoil. Athens had repeatedly missed fiscal targets agreed with
the EU and the International Monetary Fund, and stalled
structural economic reforms.
"We are convinced that the programme is back on a sound
track," Jean-Claude Juncker, chairman of the 17-nation euro
area's finance ministers told a news conference after they met
in Brussels ahead of an EU summit later in the day.
"Money will be flowing to Greece as early next week."
Separately, Juncker said the Eurogroup expected to receive a
report on Cyprus' banks' needs by mid-January in order to take a
decision on a potential 17.5 billion euro bailout for the east
Mediterranean island, which has been badly hit by fallout from
Greece's debt crisis.
The ministers agreed to disburse a total of 49.1 billion
euros in loans, with 34.3 billion of that flowing to Greece
immediately and the rest to follow in stages by the end of March
once Athens meets a series of reform benchmarks.
"We've been through quite an odyssey since the spring," EU
Economic and Monetary Affairs Commissioner Olli Rehn told a
joint news conference.
"At that time in spring a highly unpredictable political
situation had many observers convinced that the game was up for
Greece in the euro area. As we approach the end of this
turbulent year, those Cassandras have been proven wrong."
Many economists and pundits were forecasting earlier in 2012
that Athens would be forced to leave the single currency in what
became known as "Grexit".
Citigroup chief economist Willem Buiter, who coined the
term, had put the likelihood of a Greek exit within 18 months at
90 percent earlier this year. But he has since reduced that to
60 percent, arguing that Greece could fail the next donors'
review in March or see its fragile pro-bailout coalition
"GREXIT IS DEAD"
Greek Prime Minister Antonis Samaras said Thursday's
decision showed that European solidarity was working and his
country would stay in the single currency.
"Grexit is dead. Greece is back on its feet. The sacrifices
of the Greek people have not been in vain," Samaras said on
arrival for talks with other centre-right leaders in Brussels.
Agreement to release the funds hinged on the success of a
debt buyback launched by Greece last week, which will enable
Athens to retire nearly 20 billion euros in bonds repurchased at
a third of their face value from private investors.
Juncker said he was not sure additional measures would be
needed to reach an agreed goal to bring Greece's debt down to
124 percent of gross domestic product (GDP) by 2020, but the
bloc stood ready to take new steps if necessary.
The ministers' promised to consider additional debt relief
if needed provided Greece achieves a primary budget balance in
2013 before debt service payments.
IMF Managing Director Christine Lagarde, who took part in
the euro zone meeting by conference call from Latin America,
said she would recommend to the Fund's board in January that it
continue to support the Greek programme.
The debt buyback and the pledge of additional debt relief
would ensure that Greece's debt will fall to 124 percent of
gross domestic product by 2020, and to substantially below 110
percent of GDP in 2022, she said in a statement.
Continued IMF involvement is vital for several EU creditor
nations, including Germany, the bloc's biggest paymaster.
Of the immediate aid, some 16 billion euros will go towards
recapitalisation and resolution of Greece's teetering banks,
11.3 billion to finance the debt buyback and 7 billion for
A further 7.2 billion euros will flow next month to buttress
Greek banks and the remaining 7.6 billion will be paid in
monthly instalments when the conditions are met.
While the government voiced relief at the long-awaited
Brussels decision, anti-bailout radicals and ordinary Greeks
belittled or dismissed it.
Hard left opposition leader Alexis Tsipras said on visiting
a memorial to the biggest Nazi German massacre during the World
War Two occupation of Greece, at Kalavryta, that other countries
had a moral liability for the country's debts.
"Past governments have left us with an onerous debt that's
bedevilling us and we're looking for a way out of it. Our people
are not to blame. Other governments and other people too must
repay that debt," Tsipras told reporters.
In Athens, 79-year-old Thanasis Golkas, who supports himself
and his daughter's family on a 400 euro monthly pension, said:
"The money is going straight to the banks, not our pockets so
what is there to be happy about?"
Small business owner Konstantinos Papasotiriou said the
country's politicians needed to put an end to the debt problems
but he doubted they were capable of it.
"It's definitely good that we got the money but this is only
a temporary solution and we can't keep on going on like this,
from dose to dose," he said.