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Greek Bankruptcy Averted _ For Now

For three years, Greece has been struggling to convince markets as well as its creditors that it can get a grip on its public finances, which had spiraled out of control. The country is predicted to enter its sixth year of recession and is weighed down by an unemployment rate of 25 percent.

The so-called troika of the European Central Bank, IMF and the European Commission has twice agreed to bail out Greece, pledging a total of ⿬240 billion in rescue loans ⿿ of which the country has received about ⿬150 billion so far. In return for its bailout loans, Greece has had to impose several rounds of austerity measures and submit its economy to scrutiny.

Without the bailout money, the country would be facing bankruptcy and a possible forced exit from the 17-country eurozone. This would have potentially chaotic repercussions for the world economy.

Nonetheless, the spending cuts and reforms insisted on by the troika have been painful. Ordinary Greeks are struggling to make ends meet as wages have been cut and taxes increased. The country is routinely shut down as strike after strike is called in protest of yet more austerity. Meanwhile, extreme political views on both the left and right are enjoying increased popularity.

The eurogroup and IMF agreed to release in December ⿬34.4 billion in loans originally scheduled for June. The remainder will be issued in three installments in the first quarter of 2013. The money will be used to help recapitalize Greece's struggling banking industry and pay back suppliers, including its pharmacists which have gone for months without any payment from the Greek state welfare system.

Greek Finance Minister Yannis Stournaras said the deal was "very important for it keeps Greece in the euro, offers it a significant opportunity to exit the vicious cycle of recession and over-indebtedness, and contributes to its debt reduction."

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