Bailed out but barely afloat

The consensus reached by European Union officials in the early hours of Tuesday morning that secured a new bailout for Greece brought a collective sigh of relief around Europe, but Greece's financial problems are anything but solved.

The deal reached after 12 hours of talks through the night in Brussels gives Greece 130 billions euros ($170 billion) in bailout loans. It foresees Athens reducing its debt down to 120.5 percent of gross domestic product by 2020.

Eurogroup chairman Jean-Claude Juncker said the far-reaching agreement will "secure Greece's future in the eurozone."

Even with a secure future, the way forward will likely be bumpy for Greece.

"I don't think we should consider that they are cleared of any problems, but I do think we've reduced the Greek problem to just a Greek problem," said Swedish Finance Minister Anders Borg. "It is no longer a threat to the recovery in all of Europe, and it is another step forward."

'Accident prone' Greece

A report prepared in connection with the agreement indicated that Greece is still seen as "accident prone" when it comes to implementing economic reforms. As a result, a permanent monitoring mission from the EU would be established to make sure the reforms are carried out.

The monitoring is an imposition on Greece's sovereignty, but many EU politicians see it as absolutely critical.

By agreeing to the terms of the bailout, there are also concerns that Greece has hamstrung its future efforts to return to economic growth.

"We sowed the wind, now we reap the whirlwind," said Vassilis Korkidis, head of the Greek Commerce Confederation. "The new bailout is selling us time and hope at a very high price, while it doggedly continues to impose harsh austerity measures that keep us in a long and deep recession."

Swift response

Immediately after news of bailout package broke, the euro jumped against the dollar.

The deal comes after Greece's cabinet scraped together an additional 325 million euros in savings over the weekend to round off 3.3 billion euros in cuts, one of the conditions set by the EU in exchange for the release of the bailout.

Brussels had also demanded that Athens make a written commitment to implementing austerity measures after April's parliamentary election.

Greece desperately needs the bailout in order to make debt repayments to the tune of 14.5 billion euros, which mature on March 20.

More from the IMF

Meanwhile, German Finance Minister Wolfgang Schäuble addressed the International Monetary Fund's (IMF) contribution to the new bailout on Tuesday, giving the indication that their initial offer was a bit low.

"The IMF has earmarked a possible sum of 13 billion euros in addition to 10 billion remaining from the earlier program," Schäuble told a press conference, referring to money the IMF had contributed to Greece's first bailout in 2010.

The IMF had agreed to fund one third of Greece's initial bailout, and also put up a third of the money for bailouts for Ireland and Portugal.

"We have raised the expectation that the IMF will continue to make a significant contribution," Schäuble said.

mz,ccp/msh (AFP, AP Reuters)