Berlin: Eurozone finance ministers have released 35 billion euro from the second bailout package for debt-ridden Greece shortly after the government in Athens reached a landmark deal with private creditors on a bond swap, which will halve its debts to around 107 billion euros.
The finance ministers of the 17 nations using the euro, in a conference call on Friday afternoon, welcomed the pact by private sector holders of Greek sovereign bonds to write-down up to 53. 5 percent of their claims in nominal terms by exchanging their bonds for new ones with less value, longer maturity and lower interest rate.
In real terms, they may face losses up to 74 percent.
The ministers were "quite encouraged" by the high level of participation by banks, insurances, funds and other private investors in restructuring Greece's debts, Jean-Claude Juncker, Luxembourg's prime minister and chairman of the euro group said after the conference call.
They shared the view that Greece fulfilled all conditions set by the European Union and the International Monetary Fund (IMF) to receive the second 130-billion-euro bailout package.
Juncker said the ministers decided to release 30 billion euros from the package to finance the debt write-down while another 5.5 billion euros was disbursed to meet outstanding interest payments.
After Greece took steps to implement a new round of tough austerity measures and far-reaching economic reforms in return for the assistance from the EU and the IMF, the EU leaders at their Summit in Brussels 12 days ago gave their final approval to release the second bailout package.
The finance ministers were waiting for the Greek government to complete its negotiations with private creditors on the biggest restructuring of government debt in history.
A decision on releasing the entire bailout package will be taken by the finance ministers at their meeting early next week, Juncker said in a press statement.
Greece will also receive 24.4 billion euros left in the first financial rescue package of 110 billion euros, which was offered by the EU and the IMF in May, 2010.
German Finance Minister Wolfgang Schaeuble said the "successful" restructuring of Greek debts will stabilise the entire eurozone.
He told journalists in Berlin after the conference call that in his view there is no danger that some of the other heavily-indebted euro zone nations will need a similar "haircut" in the future.
The situation in Greece is quite unique and therefore a debt write down became necessary, he said.
First Published: Saturday, March 10, 2012, 15:01