Euro partners, IMF agree to $146 billion bailout of Greece

European Central Bank President Jean-Claude Trichet, left, Greek Finance minister Giorgios Papakonstantinou, center, and Chairman of the Eurogroup Jean-Claude Juncker address the media at the European Council building in Brussels on Sunday.

Associated Press

European Central Bank President Jean-Claude Trichet, left, Greek Finance minister Giorgios Papakonstantinou, center, and Chairman of the Eurogroup Jean-Claude Juncker address the media at the European Council building in Brussels on Sunday.

LONDON — European countries and the International Monetary Fund on Sunday threw Greece a lifeline worth a stunning $146 billion after the financially foundering nation unveiled a stinging program of spending cuts and tax increases to reduce its enormous government deficit.

At an emergency meeting in Brussels, finance ministers from the 16 nations that use the euro currency signed off on the bailout package, which would grant low-interest loans to Athens to help it avoid a humiliating bankruptcy. The money would be available over the next three years and would come from the International Monetary Fund and fellow Eurozone countries such as Germany and France.

"This assistance will be decisive to help Greece bring its economy back on track and preserve the stability of the euro area," said Jose Manuel Barroso, president of the European Commission, who described the bailout as an act "of solidarity and responsibility."

In exchange for the aid, the Greek government was forced to commit to new austerity measures on top of ones announced in March.

The new measures include cuts in civil servants' salaries and pensions, and tax increases, including for tobacco and alcohol, that aim to cut the deficit to below 3 percent of gross domestic product by 2014 from 13.6 percent now.

The painful retrenchment will almost certainly encounter vociferous opposition from unions and social activists in a country already racked by economic protests in recent weeks, but officials said their hands were tied.

Violent protests already marked the Labor Day parades in Athens on Saturday and more demonstrations and a nationwide general strike are set for Wednesday.

"These are the harshest, most unfair measures ever enacted. That is why our reaction will be decisive and dynamic. You can't always make the workers pay for the results of failed policies," said Stathis Anestis, spokesman for Greece's largest umbrella union, GSEE.

The loan package came in response to the severest test to hit the euro since it debuted 11 years ago, an escalating debt crisis that has weakened the currency and rattled stock exchanges around the world. The massive rescue plan is an expanded version of one proposed last month, and is still subject to approval by parliaments in some Eurozone countries.

But backers took heart from a statement by German Chancellor Angela Merkel that she would try to push legislation on the bailout through the Bundestag, the lower house of Parliament, by Friday.

Information from the Los Angeles Times and Associated Press was used in this report.

Euro partners, IMF agree to $146 billion bailout of Greece 05/03/10 [Last modified: Monday, May 3, 2010 8:17am]

© 2014 Tampa Bay Times

Join the discussion: Click to view comments, add yours

Loading...