Eurozone authorizes 2nd Greek bailout - Gayo Lues

“Euro area member states have today formally approved the second adjustment program for Greece,” Luxembourg Prime Minister and the chairman of the eurozone finance ministers, Jean-Claude Juncker said in a statement on Wednesday.

Juncker said that the European Financial Stability Facility (EFSF) has been authorized by eurozone governments to release a “first installment” of 39.4 billion euros to Greece under the scheme, to be disbursed in several tranches.

Junker described the financial aid as “a unique opportunity for Greece that should not be missed,” and said that a “strong commitment” from Athens to “fiscal consolidation, structural reforms and privatization” was required to return the Greek economy “to a sustainable path, which is in the interest of everyone.”

In order to receive the bailout fund, which is funded mostly by eurozone countries and the International Monetary Fund, Greece had to adopt harsh austerity measures including massive cuts to its private and public sector wages, pensions, health and defense spending.

Greece has the highest debt burden in proportion to the size of its economy in the 17-nation eurozone. Despite austerity cuts and the bailout funds, the country has been in recession since 2009.

Greece’s first bailout, which was approved by Eurozone finance ministers on May 2, 2010, was worth 110 billion euros (147 billion dollars).

Despite numerous austerity cuts implemented by the government and bailout funds provided by international lenders, which are aimed at stimulating growth, Greek economy has continued to contract and is not expected to show expansion until 2013.

PG/JR