Euro zone finance ministers seal €130-billion Greece bailout

Euro zone finance ministers yesterday sealed a €130-billion bailout for Greece to help the debt-stricken country avert a chaotic default in March after persuading private bondholders to take greater losses and Athens to commit to deep cuts.

Following 13 hours of talks, ministers finalised measures to slash the country's debt burden to 120.5 per cent of gross domestic product by 2020, a little above the target. With the development, Greece has been able to secure its second rescue in less than two years. It will also allow the country to meet a bond repayment next month.

By agreeing that the European Central Bank (ECB) would distribute its profits from bond buying and private bondholders would take additional losses, the ministers shaved the debt to a point that should secure funding from the International Monetary Fund (IMF) and help support the unity of the 17-country currency bloc.

However the austerity measures agreed by Greece are extremely unpopular among the population and may pose challenges for a country headed for elections in April. More protests could have politicians' having second thoughts over cutting wages, pensions and jobs.

"We have reached a far reaching agreement on Greece's new programme and private sector involvement that would lead to a significant debt reduction for Greece ... to secure Greece's future in the euro area," Jean-Claude Juncker, who chairs the Eurogroup of finance ministers, told a news conference.

The euro was up almost half a cent, after earlier losses, following the agreement on the bailout.