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Europe's leaders back new Greece deal

Colm Kelpie
Thursday 21 July 2011 20:00 BST
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Eurozone leaders are supporting a new bail-out for debt-laden Greece with a lower interest rate and more time to pay it off.

The softer lending conditions will also be applied to the multi-billion rescue loans for Ireland and Portugal as heads of state battle to prevent debt contagion spreading deeper across Europe and possibly going global.

At an emergency summit in Brussels, the Euro leaders opted to double the maturity of the loans for the three bailed-out countries from seven and a half years to 15 years, and cut the interest rate in an attempt to finally ensure the stability of the single currency.

In a joint statement, the leaders said: "We agree to support a new programme for Greece and, together with the IMF and the voluntary contribution of the private sector, to fully cover the financing gap.

"The total official financing will amount to an estimated 109 billion euro (£95.9 billion).

"This programme will be designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece."

Under the plan the private sector will provide 37 billion euro (£32.5 billion) in support to Greece.

French President Nicolas Sarkozy said there would be no private sector involvement with Ireland or Portugal.

"With respect to the two other countries under the programme, Ireland and Portugal, we are going to reduce rates and lengthen the maturities of the loans granted by the European monetary fund but we will exclude any private sector involvement," Mr Sarkozy said.

He said it would be unfair if the other measures were not applied to Ireland and Portugal.

PA

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