Greek Bailout Set for Approval

Eurozone ministers gather to sign off on rescue package

Euro area finance ministers gathered Monday to approve a second bailout for Greece after the country won approval from private bondholders to cut its debt.

Bloomberg reported that not only did ministers plan to sign off on the rescue package of 130 billion euros ($170 billion), they also intended to discuss the financial woes of Spain and Portugal and the measures both countries are taking to stem contagion of the eurozone debt crisis.

Greece’s pressure on its private creditors to accept haircuts in the bonds they hold led to a “restructuring credit event,” and it is expected that $3 billion in credit default swap contracts will be paid out as a result, according to the New York-based International Swaps & Derivatives Association.

In addition, difficulties are anticipated in keeping Greece on track to keep budgetary promises it has made to win approval of the bailout, and some officials seem convinced that the country will require even further assistance as it struggles to free itself from its current financial problems.

German Finance Minister Wolfgang Schaeuble, who has been highly critical of Greece in the past, was quoted saying in a Monday interview in the Belgian newspaper De Morgen, “Nobody can now exclude that Greece at a single moment may need a third bailout.”

However, he added, “I have all confidence that the measures that we have taken and that Greece must now implement–no simple exercise–will bring the country on the road to recovery.”

Spain could be in for its own share of criticism at the Brussels meeting, after Prime Minister Mariano Rajoy boosted his country’s budget deficit goal from the original target of 4.4% of GDP to 5.8%. In 2013 Spain is committed to meeting a 3% target, according to an unnamed official, but at the Monday meeting will likely have to explain itself regarding its change for 2012.

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