Friday, April 23, 2010

Greece Requests Financial Bailout

Friday, April 23, 2010
14:59 Mecca time, 11:59 GMT

Greece requests financial bailout

On Thursday tens of thousands of Greek civil servants staged a strike to protest over debt

George Papandreou, the Greek prime minister, has asked for the activation of financial aid package, designed to help pull the euro zone member out of its debt crisis.

The request on Friday followed negotiations with European Union and International Monetary Fund officials over the details of the $60bn emergency rescue package.

Financial data published the previous day showed a worse-than-expected budget deficit of 13.6 per cent of gross domestic product (GDP).

"The moment has come," Papandreou said.

"It is a national and pressing necessity for us to formally ask our partners for the activation of the support mechanism, which we jointly created in the European Union."

Papandreou said the markets had not responded positively to Greece's austerity measures that were designed to pull the country's disastrous finances into line.

"Today, the situation in the markets threatens to deconstruct, not only the sacrifices of the Greek people, but also the smooth course of the economy," he said.

The rescue plan aims to cover Greece's immediate borrowing needs so it can continue servicing its debt and avoid default.

Papandreou was visiting the Aegean island of Kastellorizo on Friday before travelling to the United States for a meeting with IMF officials.

He is expected to meet Jean-Claude Trichet, the European central bank president, who is also attending the event in Washington.

The bailout would have to be reviewed by the European Union executive and the European central bank, and needs approval by all 15 of the other governments that use the euro.

'Painful process'

Al Jazeera's Barnaby Phillips, reporting from Athens, said it seems as if Greece has no other option.

"This has been a long, slow, painful process that has dragged on for four to five months but in the last two weeks the endgame has looked sadly inevitable.

"It is a humiliating moment for Greece, it's a traumatic moment for a country in the euro zone, it has to take the cheaper emergency money which is on offer whether it likes it or not," he said.

On Thursday, borrowing costs spiralled to alarming and unsustainable levels, pushing interest rates for Greek 10-year bonds to nearly nine per cent.

The spike came after after Moody's credit agency downgraded the country's sovereign rating and the European Union's statistics agency Eurostat revised Greece's budget deficit in 2009 to 13.6 per cent of GDP from 12.9 per cent, and said it could be further revised by up to 0.5 percentage points.

The level is more than four times the EU limit set for the 16 countries that use the euro, which has been badly hit by the Greek financial crisis.

Athens insisted its target of reducing its deficit by at least four percentage points in 2010 remained unchanged.

Source: Al Jazeera and agencies

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