Violence in Athens as €110bn rescue package agreed
The Greek government has agreed massive austerity measures that will see a major reduction in their public service, pay and pension, retirement age going to 65 and beyond and state companies put up for sale.
The news was met with violence on the streets of Athens as a bomb was reported to have exploded outside a bank and trade unions promised more protests this week.
But Greek finance minister, George Papaconstantinou, fresh from agreeing the measures with his euro area colleagues, said while he expected people to express their hurt and anger, behind the scenes Greek citizens supported the changes.
“People understand what they need to do. They are supporting the sacrifices but under the condition that this is not in vain,” he said.
The money – €30bn of which will be available this year – will mean that Greece does not have to return to the markets for its borrowing over the next three years where it was facing penal interest rates.
But in the three years of the programme, they will have to submit to assessments every three months.
The first installment will be paid out before May 19 in time for them to meet their first hurdle of repaying about €8.5bn that is owed.
Greece got an extra two years to reduce its government deficit from 13.6% to 3% of GDP by 2014 – a similar situation to Ireland that has to go from 14.2% to 3% in the same time frame.
A total of €80bn will come from the 15 eurozone countries and €30bn from the IMF. Each country will be repaid by Greece at 5% – a little more than Ireland was able to borrow at last week. The IMF rate will be about 1.25%.
A statement from Finance Minister Brian Lenihan said the decision would help safeguard the stability of the euro area and would benefit all eurozone member states.
The Government was preparing legislation to allow Ireland provide its share, which would be up to €1.3bn, he confirmed.
A special meeting of the heads of eurozone countries will be held on May 7, to conclude the process.
In Berlin, prime minister Angela Merkel said the terms of the bailout would encourage other countries to control their budgets.
