The Greek deal

THE EUROZONE leaders have lived up to the expectations of Athens. By granting Greece another breathing space, the bailout agreed in Brussels has literally saved the concept of common currency from extinction.

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Published: Wed 28 Nov 2012, 9:29 PM

Last updated: Fri 3 Apr 2015, 12:50 AM

Failure on the part of the conglomerate to release the next tranche of bailout loans could have forced Greece to default on international commitments and subsequently financial institutions compelled to file bankruptcy. Nonetheless, in the long run it would have meant exit from the eurozone, and reverting back to its local currency drachma. All this was prevented with the largesse of the donors who mulled to find a way out of the quagmire for Athens.

Now with the creditors having agreed to cut debts by 40 billion euros, the much-desired succour of 44 billion euros will soon be in Greek coffers. The European Central Bank, the IMF and the European Commission-backed 240 billion euros loan has been at the heart of the controversy, as Greece backtracked its steps after receiving 150 billion euros. Political upheavals and an unworkable austerity plan had almost derailed the arrangement that Athens had stuck with the creditors. It is no less than a lifeline for the ill-fated economy, which will use that hard cash to fulfill its commitments and introduce reforms on the path of ensuring an austerity budget.

The Greece bailout deal has coincided with another positive development with the European Union’s top court ruling that the European Stability Mechanism is in line with the EU laws. This will help in the long run in not only strengthening the facility, as member states pour in their contributions, but also enable the 17 eurozone countries to be at ease at times of financial exigency. This decision has also settled the ongoing debate on sovereignty in terms of delegating financial powers to the Union. But the million-dollar question is still far from being addressed: how long will it take for the ailing European economy to come out of the woods? Strict institutional monitoring of budget deficits’ of member states can help find a way out of the crisis.

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