Greece agrees bond swap as latest move to cut debts and avoid default

The emergency bill was passed yesterday with a show of hands in an almost empty House as the two main parties that back Prime Minister Lucas Papademos’ governing coalition stated their support.

Greece is now expected to make a formal offer to private bondholders. They will have 10 days to respond on whether they will take part in the exchange.

The writedown to be imposed on banks, pension funds and other private holders of Greek government bonds was agreed upon this week by finance ministers from the 17-member eurozone.

The meeting in Brussels also approved a new 130bn euro (£110bn) bailout to prevent Greece from going bankrupt and keep the country within the euro area.

Speaking in Parliament ahead of the vote, Mr Venizelos insisted that ratifying the bond swap was the only way forward, and the alternative would be catastrophic, setting Greece back decades.

“The true dilemma is: either sacrifices with prospects, or complete destruction with no prospects. Either cuts which are harsh... or the inability to pay salaries and pensions. Either reduction of fortunes, or a complete loss of fortunes. Either high unemployment or generalised unemployment,” he said.

He added: “Now Greece is obtaining a window of opportunity. We must make the most of it. We have not finished. We are starting again with better terms. We mustn’t repeat mistakes, we mustn’t have delays... We must complete the implementation of the programme.”