Greek tragedy averted?

European finance ministers have agreed a rescue package for crisis-hit Greece after Fitch Ratings slashed its credit rating on the country's debt because of mounting concerns about the country's prospects. 

 

Fitch, one of the world's big three ratings agency, lowered its rating by two notches, to BBB-, and said that the outlook on the country remains negative. One more downgrade would put Greece's debt at junk status  which would spell additional trouble for the Euro. 

 

With that in mind, the 16 members of the Eurozone have come up with a compromise deal to extend as much as £26 billion in cut-price loans to Athens this year while will sit alongside £13 billion in credit that the International Monetary Fund will provide. 

 

Any default by Greece, which must find a colossal £10 billion by next month to service its £260 billion debt  would deal a potentially fatal blow to the credibility of the single currency.

 

European Central Bank President Jean-Claude Trichet said on Monday the weekend decision on the details of aid for Greece is positive but all parties must meet their responsibilities. "I consider the decision which was taken during the weekend, to implement technically the heads' agreement at the level of the governments of the euro area, as positive," he said.  "We expect all parties concerned to continue to be up to their responsibilities and of course the Greek government implementing rigorously the additional measures taken and that we had qualified as 'convincing'."