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Eurozone finance ministers agree Greek bailout


Money to be raised though private bondholders taking more losses

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Eurozone finance ministers approved the €130 billion bailout for Greece on Monday.

The deal, agreed after 13 hours of talks, includes measures that will cut Greece's debt to 120.5 percent of gross domestic product by 2020, which is slightly above the target. The ministers hope that this will be enough to secure funding from the International Monetary Fund, which should shore up the eurozone.

The bailout will allow Greece to avoid a €14 billion default on bond repayments due on 20 March.

The European Central Bank would distribute profits from bond buying and private bondholders would take more losses to pay for the bailout.

Greece has had to make unpopular cuts to pensions and pay worth €3.3 billion.

Parliaments in three countries that have been most critical of Greece's second bailout - Germany, the Netherlands and Finland - must now approve the package. German finance minister Wolfgang Schaeuble, who caused an outcry by suggesting that Greece was a "bottomless pit," said he was confident it would be passed.

"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 gained in Asia after the bailout was agreed.

Some economists say there are still questions over whether Greece can pay off even a reduced debt burden, suggesting the deal may only delay a deeper default by a few months.

Swedish finance minister Anders Borg said: "What's been done is a meaningful step forward. Of course, the Greeks remain stuck in their tragedy; this is a new act in a long drama.

"I don't think we should consider that they are cleared of any problems, but I do think we've reduced the Greek problem to just a Greek problem. It is no longer a threat to the recovery in all of Europe, and it is another step forward."

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Eurozone finance ministers agree Greek bailout
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