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After a marathon debate and a giant battle in which Greece was supported by its Prime Minister Lucas Papademos, his Italian colleague Mario Monti and the Executive Director of the International Monetary Fund, Christine Lagarde, the finance ministers of eurozone countries endorsed the second bailout of 130 billion euro. The money will be paid into a special account in which there will always be funds available for the payments to creditors for three months ahead.
    The bad news is for private creditors who will have to accept not the 50% "voluntary" write-off of the net present value of the Greek bonds they have purchased but 53.5%. In net present value, this means that the losses for private creditors will exceed 80%. With this decision, the eurozone finance ministers are convinced that the Greek debt will be 120.5% of GDP in 2020 and it will be able to service it alone. The interest rate on the new loan is 1.8%. Retroactively, the interest rate on the first bailout of 110 billion euro was reduced too. The payment of the Greek debt to institutional lenders will be in accordance with a rider to the Greek constitution, which is to be approved by parliament.
      Greek Prime Minister Lucas Papademos described the decision as "historically important." "We are given the opportunity to grow steadily, to limit insecurity and restore the confidence in the Greek economy. The new programme will allow us to improve competitiveness and introduce prerequisites for sustainable economic growth," he said at a press conference after the Eurogroup meeting. The president of the Eurogroup Jean-Claude Juncker stressed that the bailout to Greece is unprecedented and guarantees that Greece remains in the eurozone. Mario Monti, the Italian Prime Minister, is confident that the decision reached is good for Greece, the eurozone and the markets. The Commissioner for Monetary Affairs Olli Rehn said in turn that a permanent mission from the European Commission will be established in Greece to advise the Greek government in implementing the necessary reforms.
     This is the positive news. The Minister of Finance of Austria Maria Fekter formulated the bad news: "If Greece does not implement the necessary reforms, there will be no economic growth. We have seen billions flowing into Greece in the past but they melted into consumption rather than being invested in improving the infrastructure, the state apparatus and regional development." In other words, the new financial aid package of 130 billion does not relieve Greece of the measures of a strict financial discipline.
    Of course, the real bad news is for the private creditors of Greece. According to the official release of the Institute of International Finance, the 53% write-off of the Greek debt planned by Eurogroup means losses of 107 billion euro in nominal terms for the private creditors instead of 100 billion, agreed by the Greek government and private creditors. At 11 am Athens time, the Executive Director of the Institute Charles Dallara will give a press conference in Brussels, which will give further details about the intentions of the private creditors of Greece. But some obvious things can be established even now.
    The first is that the even greater debt write-off further jeopardizes the already dubious voluntary nature of the PSI procedure. Financial circles are confident that the Greek government will be forced to trigger the collective action clauses CACs, which will bind all creditors to write off 53.5% of the net present value of the bonds they hold. This would effectively mean that Greece would fall into the partial or temporary failure category. The exchange of old with new bonds of lower value, lower interest rates and longer maturity is expected to begin on 8 March and to be completed within three days - i.e. on 10 March. The procedure itself will be completed in mid-April.