Greece Says Second Bailout 'Great Relief'
Greece's finance minister expressed "great relief" Friday in the wake of a second European bailout for the country's crisis-hit economy, and markets rallied on the news.
But Evangelos Venizelos also promised to press ahead with unpopular cost-cutting measures aimed at generating a primary budget surplus, starting next year.
Eurozone countries and the International Monetary Fund pledged Thursday to give Greece a euro109 billion ($155 billion) worth of rescue funds, on top of the euro110 billion granted a year ago.
The new eurozone loans will carry a generous 3.5 percent interest rate and maturities of between 15 and 30 years.
Greek shares jumped on the open, with the benchmark index up 3.4 percent at 1,256,.30. Exorbitant borrowing rates — which have kept Greece locked out of bond markets — eased by more than 100 basis points to 16.5 percent for 10-year bonds.
"(The decision) provides a great relief for the Greek economy, which will gradually be passed on to the real economy," Venizelos told a news conference in Athens.
"But this in no way means we will relax of our efforts. We must continue implementing our program and remain committed to the great target of meeting budgetary goals."
He added: "Yesterday's decision set a bottom of the barrel for the Greek public debt," Venizelos said. "Now we have a new momentum."
Greece got the rescue deal three weeks after passing a new, five-year austerity program worth euro28 billion ($40 billion) in budget savings and euro50 billion ($71 billion) in privatizations — facing down violent protests, strikes and a sharp drop in popularity for the governing Socialist party.
Anti-austerity protests continued in Greece on Friday, with striking taxi drivers occupying the entrances of archaeological sites on the holiday islands of Corfu and Zakynthos, and letting tourists in for free. Drivers are angry at changes in licensing rules under austerity reforms.
Friday's stock rally was led by banks which saw their shares jump by more than 7 percent, on safeguards provided on the new bailout-loan agreement.
"The Greek banking system is perhaps the most guaranteed and secure in Europe, if not elsewhere. There is now a great protective umbrella over Greek banks," Venizelos said.
He argued that warnings by credit rating agencies to slap a "selective default" rating on Greece due to private sector help with the rescue package would not have a detrimental effect.
"The issue of bank liquidity has been secured. This liquidity will be channeled to the real economy," he said.
"Whatever reaction outside the institutional system, whatever rating, has been answered in advance and will have no real repercussions."