BRUSSELS: Eurozone finance ministers agreed a 130 billion euro ($172 billion) rescue for Greece Tuesday to avert an imminent chaotic default after forcing Athens to commit to unpopular cuts and private bondholders to take bigger losses.

The complex deal wrought in overnight negotiations buys time to stabilize the 17-nation currency bloc and strengthen its financial firewalls, but it leaves deep doubts about Greece’s ability to recover and avoid default in the longer term.

After 13 hours of talks, ministers finalized measures to cut Athens’ debt to 120.5 percent of gross domestic product by 2020, a fraction above the target, securing a second rescue in less than two years in time for a major bond repayment due in March.

“We have reached a far-reaching agreement on Greece’s new program and private sector involvement that would lead to a significant debt reduction for Greece ... to secure Greece’s future in the euro area,” said Jean-Claude Juncker, who chairs the Euro group of finance ministers.

Greece will be placed under permanent surveillance by an increased European presence on the ground, and it will have to deposit funds to service its debt in a special account to guarantee repayments.

The 5 a.m. deal, local time, was hailed as a step forward for Greece, but experts warned that Athens will need more help to bring its debt down to the level envisaged in the bailout and will remain worryingly “accident prone” in coming years.

By agreeing that the European Central Bank would distribute its profits from bond-buying and private bondholders would take more losses, the ministers reduced Greece’s debt to a point that should secure funding from the International Monetary Fund.

Italian and Spanish bond yields fell amid relief among investors that a threat to the wider eurozone had been avoided, although expectations of an agreement had been largely priced into foreign exchange and stock markets.

“It’s an important result that removes immediate risks of contagion,” Italian Prime Minister Mario Monti told a news conference.

“A nightmare scenario was avoided,” said Greek Finance Minister Evangelos Venizelos in Athens. “It is maybe the most important [deal] in Greece’s postwar history.”

While the deal provides time for the eurozone to put new crisis measures in place over the coming months, it means Greece will struggle for years without economic growth.

The austerity measures imposed on Athens are widely disliked among the population and will put pressure on politicians who must contest an election expected in April.

Further street unrest could test politicians’ commitment to cuts in wages and jobs. Greece’s two biggest labor unions Wednesday called a protest in Athens.

An opinion poll taken just before the Brussels deal showed that support for the two mainstream parties backing the rescue had fallen to an all-time low while leftist, anti-bailout parties showed gains.

Anastasis Chrisopoulos, a 31-year-old Athens taxi driver, saw no reason to cheer the deal. “So what?” he asked. “Things will only get worse. We have reached a point where we’re trying to figure out how to survive just the next day, let alone the next 10 days, the next month, the next year.”

Conservative leader Antonis Samaras, a strong contender to become next prime minister, said the rescue package’s debt-reduction targets could only be met with economic growth.

“Without the rebound and growth of the economy ... not even the immediate fiscal targets can be met, nor can the debt become sustainable in the long-term,” he said during a visit to Cyprus.

Parliaments in three countries that have been most critical of bailouts – Germany, the Netherlands and Finland – must now approve the package. German Finance Minister Wolfgang Schaeuble, who caused an outcry by suggesting that Greece was a “bottomless pit,” said he was confident it would be passed.

Many economists question whether Greece can pay off even a reduced debt burden, suggesting the deal may only delay a deeper default by a few months.

A return to economic growth in Greece could take as much as a decade, a prospect that brought thousands onto the streets of Athens to protest Sunday. The cuts will deepen a recession already in its fifth year, hurting government revenues.

“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.”

The accord will enable Athens to launch a bond swap with private investors to help put it on a more stable financial footing and keep it inside the eurozone.

About 100 billion euros of debt will be written off as banks and insurers swap bonds they hold for longer-dated securities that pay a lower coupon.

Private sector holders of Greek debt will take losses of 53.5 percent on the nominal value of their bonds. They had agreed to a 50 percent nominal writedown, which equated to around a 70 percent loss on the debt’s net present value.