Loans

Brussels, Belgium (AHN) – Greek politicians have reached a deal that will help the financially ailing Mediterranean country avoid a messy default.

Political leaders struck a deal for a package of austerity measures Thursday. The move clears the way for a swap to cut the nation’s debt and secure its second round of rescue money in two years.

At a press conference Thursday in Frankfurt, Greek Prime Minister Lucas Papademos called European Central Bank President Mario Draghi to tell him “an agreement has been reached.” An official announcement is expected later in the day.

The accord was reached less than four hours before eurozone finance ministers are set to hold an emergency meeting in Brussels to discuss the 130 billion euro ($1.72 billion) lifeline. Holders of Greek debt will take a 70 percent haircut.

A Greek default would be devastating to the entire European region and would send ripple effects that would rock world economies.

Talks of a deal have been stymied for months as leaders worked out what they considered an acceptable deal. The agreement comes just in time. A formal offer for the debt swap must be made by Feb. 13 to allow all procedures to be completed before the March 20 Greek bonds come due.

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