Agreement paves way for Greece bailout
Source: Agencies |
May 3, 2010, Monday
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Print Edition
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GREECE has agreed to terms with the European Union and IMF, opening the door to a multi-billion euro financial bailout, Prime Minister George Papandreou said yesterday.
But his people face years of painful sacrifices.
The aid package, expected to total around 120 billion euros (US$160 billion) over three years, still needs backing from Greece's European peers.
European diplomats said they expected the emergency funding to be unblocked by the second half of the following week, beginning May 10. Athens needs funds by May 19, when it has to repay 8.5 billion euros of debt to its creditors.
In exchange for the largest international financial bailout by far assembled for any country, Athens announced spending cuts and tax increases totalling 30 billion euros over three years - on top of measures already agreed.
Greeks have already taken to the streets to demonstrate against the austerity drive and previous governments have backed off reforms to defuse often violent protests. But politicians in Germany - where public opinion is hostile to any handouts - made clear that Athens should not take approval for granted.
The package is the first rescue of a member of the 16-nation euro zone and aims to stem a debt crisis that has shaken financial markets worldwide.
'Unprecedented'
"It is an unprecedented support package for an unprecedented effort by the Greek people," a sombre Papandreou told a televised Cabinet meeting.
"These sacrifices will give us breathing space and the time we need to make great changes," he added. "I want to tell Greeks very honestly that we have a big trial ahead of us."
Telling angry Greeks to choose between the painful rescue or economic collapse, the government now aims to bring its towering budget deficit back to the EU limit by 2014, two years later than originally promised.
"These measures are tough and unfair," said Stathis Anestis, a spokesman for private sector union GSEE. "They lead workers to misery and the country deeper into recession."
Economists were more positive.
"The aid package will help defuse the primary cause of concern for creditors, which is the imminent risk of default," said Lena Komileva, head of G7 market economics at Tullett Prebon. But she noted that there was still a question mark over political approval across Europe.
Germany unsure
German politicians said that blessing would come with strings attached. Economy Minister Rainer Bruederle said Cabinet would closely examine the agreement today before deciding on Germany's contribution to the bailout.
A conservative ally of Chancellor Angela Merkel also demanded new conditions, including sending a commissioner to monitor spending cuts and accounting.
"We can't give Greece any blank checks," said North Rhine-Westphalia state premier, Juergen Ruettgers.
Greek Finance Minister George Papaconstantinou said the deal's size would be revealed when he met his euro zone counterparts in Brussels later yesterday.
But his people face years of painful sacrifices.
The aid package, expected to total around 120 billion euros (US$160 billion) over three years, still needs backing from Greece's European peers.
European diplomats said they expected the emergency funding to be unblocked by the second half of the following week, beginning May 10. Athens needs funds by May 19, when it has to repay 8.5 billion euros of debt to its creditors.
In exchange for the largest international financial bailout by far assembled for any country, Athens announced spending cuts and tax increases totalling 30 billion euros over three years - on top of measures already agreed.
Greeks have already taken to the streets to demonstrate against the austerity drive and previous governments have backed off reforms to defuse often violent protests. But politicians in Germany - where public opinion is hostile to any handouts - made clear that Athens should not take approval for granted.
The package is the first rescue of a member of the 16-nation euro zone and aims to stem a debt crisis that has shaken financial markets worldwide.
'Unprecedented'
"It is an unprecedented support package for an unprecedented effort by the Greek people," a sombre Papandreou told a televised Cabinet meeting.
"These sacrifices will give us breathing space and the time we need to make great changes," he added. "I want to tell Greeks very honestly that we have a big trial ahead of us."
Telling angry Greeks to choose between the painful rescue or economic collapse, the government now aims to bring its towering budget deficit back to the EU limit by 2014, two years later than originally promised.
"These measures are tough and unfair," said Stathis Anestis, a spokesman for private sector union GSEE. "They lead workers to misery and the country deeper into recession."
Economists were more positive.
"The aid package will help defuse the primary cause of concern for creditors, which is the imminent risk of default," said Lena Komileva, head of G7 market economics at Tullett Prebon. But she noted that there was still a question mark over political approval across Europe.
Germany unsure
German politicians said that blessing would come with strings attached. Economy Minister Rainer Bruederle said Cabinet would closely examine the agreement today before deciding on Germany's contribution to the bailout.
A conservative ally of Chancellor Angela Merkel also demanded new conditions, including sending a commissioner to monitor spending cuts and accounting.
"We can't give Greece any blank checks," said North Rhine-Westphalia state premier, Juergen Ruettgers.
Greek Finance Minister George Papaconstantinou said the deal's size would be revealed when he met his euro zone counterparts in Brussels later yesterday.
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