Sense of relief returns to Greece
Tuesday, 4 May 2010
From Fazle Rashid
NEW YORK, May 03: A sense of relief has returned to Greece. Athens clinched a deal on a long delayed financial rescue package with its reluctant European partners and the International Monetary Fund (IMF) yesterday. Some of the conditions of the rescue package are humiliating. It would need years of painful belt-tightening. International financial aid will be in short supply and will be made available on stringent conditions
The Greece package is not enough to stop the spread of economic contagion to other European countries with mounting debts and troubled economies, the New York Times (NYT) in a report said today. Greece has been given a rescue package of $146 billion in loans over the next three years. The bailout provides a lifeline to the Greek government but similar challenges await other deficit-racked countries like Portugal, Spain and perhaps even Italy, the same paper said.
Countries like Hungary and Romania which are not members of the 16-member Euro group but use euro as their currencies, are facing problems. Some have criticised European nations for their delayed response that made things worse and the stringent conditions attached to the rescue package. Greece has agreed to raise its value added tax (VAT) to 23 per cent, freeze civil servants, wages, stop payment of bonuses, freeze on fresh appointments ,and a cut in perks of the members of the parliament.
President Obama talked to Greek Prime Minister Vassilis Papadimitriou over phone to offer his support and called the new measures "brave". The bailout begins with 45 billion euros this year. The budget cuts will be to the tune of $40 billion over the next three years. The bailout plan also includes support fund for domestic banks.
Both European Union (EU) and the IMF will be keeping a close eye so that Greece does not deviate from its pledges.
The loans to Greece from eurozone countries and the IMF were described by Dominique Strauss-Kahn, Managing Director of IMF as exceptional but necessary, given the significant risk of spillover to other countries.
NEW YORK, May 03: A sense of relief has returned to Greece. Athens clinched a deal on a long delayed financial rescue package with its reluctant European partners and the International Monetary Fund (IMF) yesterday. Some of the conditions of the rescue package are humiliating. It would need years of painful belt-tightening. International financial aid will be in short supply and will be made available on stringent conditions
The Greece package is not enough to stop the spread of economic contagion to other European countries with mounting debts and troubled economies, the New York Times (NYT) in a report said today. Greece has been given a rescue package of $146 billion in loans over the next three years. The bailout provides a lifeline to the Greek government but similar challenges await other deficit-racked countries like Portugal, Spain and perhaps even Italy, the same paper said.
Countries like Hungary and Romania which are not members of the 16-member Euro group but use euro as their currencies, are facing problems. Some have criticised European nations for their delayed response that made things worse and the stringent conditions attached to the rescue package. Greece has agreed to raise its value added tax (VAT) to 23 per cent, freeze civil servants, wages, stop payment of bonuses, freeze on fresh appointments ,and a cut in perks of the members of the parliament.
President Obama talked to Greek Prime Minister Vassilis Papadimitriou over phone to offer his support and called the new measures "brave". The bailout begins with 45 billion euros this year. The budget cuts will be to the tune of $40 billion over the next three years. The bailout plan also includes support fund for domestic banks.
Both European Union (EU) and the IMF will be keeping a close eye so that Greece does not deviate from its pledges.
The loans to Greece from eurozone countries and the IMF were described by Dominique Strauss-Kahn, Managing Director of IMF as exceptional but necessary, given the significant risk of spillover to other countries.