BRUSSELS —An EU diplomat said an agreement has been reached today to give Greece $170 billion more in bailout loans and bring its debt down to 120.5 percent of GDP by 2020.
The official, who spoke on condition of anonymity, said the details were still being worked out in the early hours of today, more than 12 hours after discussions began.
A debt level of 120.5 percent of GDP is considered close to the maximum sustainable amount for Greece.
Greece desperately needs another rescue package if it is to avoid a calamitous default next month when a bond issue comes due.
As months of tense negotiations appear to be winding down, eurozone finance ministers worked deep into the night Monday to try to agree on a second giant bailout to bring Greece back from the brink of default, subject to strict conditions and in exchange for yet more severe austerity measures.
Under the bailout terms, Greece is supposed to reduce its debt to 120 percent of gross domestic product by 2020, from about 160 percent now. But the steady deterioration of the public finances in Athens has left the country’s creditors with problems in making the figures for Monday’s bailout add up, and the latest estimates suggest that figure would be closer to 129 percent. The talks in Brussels are trying to address how that financial gap will be addressed, to satisfy demands by the eurozone, the European Central Bank and the International Monetary Fund.
Representatives of private-sector banks that hold Greek bonds were resisting pressure to accept further losses. Other ways of making the numbers add up would be considered only when the negotiations with the private sector were close to completion, said one eurozone official not authorized to speak publicly.
In advance of the meeting in Brussels, the French finance minister, Francois Baroin, said Monday that all the conditions were in place for a bailout of $172 billion, which already require private investors to take steep losses on their holdings of Greek debt.
The Greek finance minister, Evangelos Venizelos, said his government also believed it had met all the conditions for the second bailout to be released.
“We expect today the long period of uncertainty — which was in the interest of neither the Greek economy nor the eurozone as a whole — to end,” Venizelos said in a statement issued after his arrival in Brussels.
According to a draft agreement for the bailout, Greece will make big spending cuts, including reducing pharmaceutical expenditure by more than 1 billion euros in 2012 through increased use of generic medicines, cutting overtime pay for hospital doctors by at least 50 million euros, saving 300 million euros in military procurement and saving 30 million euros by reducing the number of deputy mayors and their staff.
The 50-page draft agreement also details the changes to be made to Greece’s notoriously weak tax-collection system.
The New York Times contributed to this report.
