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May 01, 2010

Greece Reaches Agreement with EU, IMF on Aid Package

Greek PM Papandreou says package necessary for Greece to avoid bankruptcy, country must be willing to make major sacrifices

The Greek prime minister says his government has reached agreement with the European Union and the International Monetary Fund (IMF) on a multi-billion-dollar financial bailout package.

George Papandreou said Sunday the package is necessary for Greece to avoid bankruptcy, and the country must be willing to make major sacrifices.

Details of the package, said to be worth $160 billion, are to be announced later Sunday.

Under the plan, the other 15 EU countries and the IMF will extend loans to Greece.  Germany will be the largest contributor, but it has been reluctant to release funds without Athens taking further austerity measures.

German Economy Minister Rainer Bruederle said Sunday the German government will closely examine the bailout agreement before deciding on Germany's contribution.  Bruederle said in a statement that he expects Greece to act quickly to enact the reform measures it has agreed to implement.  

The head of the European Commission, Jose Manuel Barroso, expressed support Sunday for the aid package for Greece.  Barroso said the package will be "decisive" in getting Greece's economy back on track, and will keep the crisis from further threatening the financial health of other EU nations.

On Saturday, thousands of protesters rallied in Athens against the government's plan to make deep budget cuts.  Protesters hit police with sticks and threw fire bombs.  Police fired tear gas to break up the crowds.  

Greece's public sector union has been leading opposition to the government's planned austerity measures.  Union officials express concern the measures will include tax increases and a wage freeze for government workers.  

Mr. Papandreou has said such measures are necessary to ensure the nation's survival.  The government hopes to cut its budget deficit by some $32 billion.

Politicians and investors are worried that economic problems could spread if Greece fails to pay back its debt.  Those concerns grew in the past week when a key credit rating agency, Standard and Poor's, downgraded its credit ratings of Greece, Portugal and Spain.

Some information for this report was provided by AP, AFP and Reuters.