Greek government approved today the debt restructuring program to private lenders through an exchange of bonds, which will reduce the financial liabilities by €107 billion, according to Greek newspaper Khatimerini.
“A titanic effort was made to provide financial support for the country”, said Prime Minister Lucas Papademos after the Cabinet meeting. Greek authorities hope the debt restructuring process to be completed until March 12, before reaching maturity of bonds worth €14.5 billion on March 20.
The Parliament approved on Thursday in Athens the details of bond exchange program through which private creditors must accept a decrease by 53.5% of the nominal value of their holdings. The exchange of bonds will reduce Greek debt by €107 billion, an essential component of the second rescue bailout program. The public component of the program, which will be provided by euro area countries and the IMF, is €130 billion. By applying this program, public debt to GDP should decrease from the current ratio of 160% to 120.5% by 2020.
Greek Parliament approved the exchange of bonds to private creditors
The exchange of bonds to private creditors was approved by the Greek Parliament, an essential component of the €130 billion program, despite protests against austerity measures undertaken in exchange for financial support, according to Reuters. “By passing this bill, the Parliament allows us to begin to get out of this whirlwind”, said Finance Minister Evangelos Venizelos.
The offer was supposed to be submitted to private creditors by Friday, and the exchange to be completed until March 12, before the deadline of March 20, when debt of €14.5 billion matures. Greece’s largest unions have called again a general strike for February 29, but members of the government claim that the only alternative to the rescue plan is bankruptcy and leaving the euro area.
Greece’s private creditors hold bonds of almost €200 billion and will support a reduction of their nominal value of 53.5% and a real loss of 73% -74%.
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