Greece Accepts Second Troika Bailout of €130 Billion with 53.5% Private Debt Haircut

The Eurogroup endorses Greece’s Second Economic Adjustment Programme, providing €130 billion through the European Financial Stability Facility (EFSF) mechanism along with approximately €12 billion from the IMF, running until June 2015. The EFSF ultimately disburses €141.8 billion total. Finance ministers approve the deal which includes a 53.5% debt write-down (‘haircut’) for private Greek bondholders—one of the largest sovereign debt restructurings in history. In exchange, Greece must reduce its debt-to-GDP ratio from 160% to 120.5% by 2020, requiring continued harsh austerity measures including further cuts to public spending, pensions, salaries, and social services. Despite the massive private creditor haircut, the second bailout fails to achieve its stated objectives. The debt-to-GDP ratio continues climbing rather than falling, ultimately reaching 180% as the economy continues contracting under austerity’s depressive effects. The restructuring primarily benefits large European banks and financial institutions that hold Greek bonds, while ordinary Greeks continue suffering from unemployment, poverty, and the dismantling of the social safety net. The bailout funds largely flow through Greece to creditor nations and institutions rather than supporting the Greek economy or population. The program demonstrates a core feature of modern debt crises: supposed ‘bailouts’ primarily rescue creditor institutions and bondholders rather than debtor nations, while austerity conditions ensure continued extraction of wealth from the debtor population to international finance. The Troika’s insistence on maintaining unsustainable debt levels while imposing austerity creates a doom loop where economic contraction makes debt burdens progressively worse, requiring still more bailouts and deeper austerity in an endless cycle that enriches creditors while impoverishing citizens.