NEWS | 2012 | Second bail-out agreed for Greece

22 Feb 2012

Second bail-out agreed for Greece

With the backdrop of riots, social unrest and a three-year recession a second bail-out programme has been agreed for Greece. The accord will force Greece to implement severe economic policies including a reduction in wages, pension provision and jobs, but it will allow them to avoid a potentially hazardous default on their debt in the near-term.

The lending criteria is strict: the loans can only be used for debt restructuring and repayments as well as liquidity for Greece’s fragile banking industry; next to nothing will go directly to help the Greek economy. In return, Greece must reduce its debt to 120% of GDP by 2020 and ensure a change to its constitution to ensure debt repayments are given the highest priority. This deal will allow Greece short-term relief, but the threat of a precarious decade for Greece remains.

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