What this means is that the country will receive its €130bn bailout and will not default, with the arrangement taking around €107bn from its debt levels.
What this does not mean is Greece will not default at some point in the future, but for now Prime Minister Lucas Papademos knows he will get the next tranche of funding from the European Union and the International Monetary Fund.
The precise details are still to be confirmed but according to Greece’s Ministry of Finance, 85% of debt holders and nearly 70% of international debt holders agreed a debt-for-cash swap. As well as cash, bondholders will also be able to swap into longer-term bonds.
Current investors will get back considerably less than their original investment, and over a longer time period.
Greece is in the fifth year of a recession; it still has debt-to-GDP ratio of around 160%; unemployment at 21% (51% youth unemployment) – the task ahead is still huge and there is no quick fix.
