Greece likely to call on part of €45bn EU aid package

THE Greek government is expected to call on a portion of the joint eurozone-International Monetary Fund loan of €45 billion later this week if they fail to raise money from the markets today at an acceptable rate.

Ireland has agreed to lend approximately €450 million to Greece at an interest rate of around 5%, currently more than the rate at which Ireland borrows.

Experts from the European Commission and the International Monetary Fund, which has agreed to lend up to €15 billion as part of the package, met in Brussels yesterday to agree details.

Before the end of May the Greek government needs to raise €11.5bn as part of the €54bn they need to cover their costs this year.

Today they will look for €1.2bn on the markets in six and 12-month treasury bills.

A senior finance ministry official in Athens said any decision to call on the eurozone package will be determined by market reaction over the next few days. But they hope that having the package available – referred to as “having a loaded gun on the table” by the prime minister George Panandreou – will force markets to reduce their rates.

The value of the euro against the US dollar dropped yesterday after Germany voiced further reservations.

Berlin continued to insist the aid would be available only as a last resort and that it would require a full meeting of EU leaders to agree unanimously.

Commission officials said it could be activated either at heads of state and government level or they could deputise this to their finance ministers who could discuss it through a teleconference.

However, spokesperson for German Chancellor Angela Merkel, Christoph Steegmans, emphasised it would be used only as a last resort and adding: “The fact that a fire extinguisher has been mounted on the wall does not mean that it will be used.”

Chancellor Merkel’s comments prompted a response from experts saying they highlighted the uncertainties surrounding the package.