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Eurozone agrees €130bn bailout for Greece

During overnight talks in Brussels, eurozone governments back a second bailout for Greece.

The euro rose early on Tuesday when a second bailout for debt-laden Greece was agreed after 13 hours of talks.

Greece will receive loans of €130 billion (£110bn) for an aid and austerity programme that has been agreed must reduce the country's debt, by 2020, from 160 per cent to 120.5 per cent of GDP. The deal also includes a write-off of the country's private creditor debt, worth around a further €100 billion (£84bn).

At a press conference in the early hours, the Prime Minister of Luxembourg and president of the Euro group, Jean-Claude Juncker, said:

This new programme provides a comprehensive blueprint for putting the public finances and the economy of Greece back on a sustainable footing and hence for safeguarding financial stability in Greece and in the euro area as a whole.

The EU's economic and monetary affairs commissioner, Olli Rehn, said:

The Greek economy can no longer rely on a large administration financed by cheap debt, but by investment to facilities new growth and jobs.

The new deal causes private holders of Geek debt to lose 53.5 per cent on the value of their bonds. Total loss to investors in the country may reach 70 per cent. The Greek parliament is set to vote on the bailout on Wednesday.

The securing of a second deal will come as a relief to Greece which desperately needed to secure funds by 20 March. This deadline marks the next round of the country's debt repayment of €14.5bn.

Lucas Papademaos, the Greek prime minister, called this morning's breakthrough an "historic day" for the country.

Greece received a first bailout in 2010 from the European Union and International Monetary Fund of €110 billion (£91bn). Despite the injection of funds, the country's economy has not emerged from its debt crisis.

Alice Gribbin is a Teaching-Writing Fellow at the Iowa Writers' Workshop. She was formerly the editorial assistant at the New Statesman.