Greece will become a productive country: Papandreou

(ATHENS) - Greece, buoyed by a broad-based eurozone debt crisis accord, will continue efforts to become a productive country, Prime Minister George Papandreou said in a televised address Thursday.

"After the battle we have won, which is of huge importance for the country ... we will continue to work intensively so that Greece becomes productive," Papandreou said in a brief address on the accord reached overnight at a eurozone summit in Brussels.

Earlier, Greek Finance Minister Evangelos Venizelos said his country's massive debt, which threatened to sink the country and the eurozone, was manageable now after a deal with creditor banks to cut it by 50 percent,

The "debt becomes viable under international guidelines" with the accord, Venizelos said, noting that without the 'haircut,' Greece would have seen its borrowing equal to 173 percent of annual economic output by 2020, an unsustainable level.

Greek debt at 350 billion euros is equal to about 160 percent of Gross Domestic Product but the 50-percent reduction agreed in Brussels only covers those government bonds held by private sector creditors such as banks.

The result is the total debt mountain will be cut to about 120 percent of GDP, much more manageable but still well above the 60 percent EU limit.

To protect the banks from the fallout of the debt reduction, the EU also agreed to make available some 100 billion euros to help recapitalise them.

Venizelos said the accord makes a very significant difference to Greek public finances.

In his address, Papandreou said the deal gives Greece more time to stabilize its finances and frees it from a daunting period of uncertainty, while calling on the country to unite in the effort to restore its financial health.

"We still have a lot of work to do and we must all be together," he said.

The Athens stock exchange was up nearly 5.0 percent shortly before closing time in the wake of the agreement as global markets soared on the deal.

But main opposition leader Antonis Samaras said the government was boasting for no reason.

The EU deal "proves that the government's policy was wrong," he said earlier in a televised address of his own.

"The (debt) 'haircut' will bring the country's debt ratio to 120 percent of output in 2020, which is where it was in 2009," Samaras said.

"Those who celebrate about bringing the country back to 2009 (by) 2020 should get serious ... the government responsible for a shipwreck should not speak of salvation," he said.

Speaking in Brussels earlier, Papandreou noted that the details would still have to be negotiated and concluded "by the end of the year" to enable Greece to finalise budget plans.

Already weakened by the crisis and shut out of the financial markets, not all Greek banks will be able to weather the increased cost of covering their bond losses and Papandreou admitted some could pass under temporary state control.

"It is very likely that a great part of bank shares will come under Greek state control," he told reporters in Brussels.

"After restructuring, these shares will be made available on the market as other countries have done," he said.

The prime minister was careful to stress that Greek pension and social insurance funds, already under strain from chronic contribution dodging and rising jobless benefits during a biting recession, would be safe.

"The insured and pensioners can be sure about their funds and pensions," he said earlier.

The eurozone leaders also agreed a new bailout to replace the 109 billion euros in aid loans agreed in July. It would be worth up to 100 billion euros until 2014 and should be agreed by the end of the year.

Former conservative finance minister Stefanos Manos argued that Greece's decision to cut its debt would haunt it for years to come.

"I am sorry and ashamed that the Greek government has opted to welsh on our creditors. This decision will haunt us for years. Let's see how easy it will be to secure loans in future," he told Flash Radio.