Greek Prime Minister George Papandreou officially requested an economic relief package on Friday worth €45 billion from the European Union and the International Monetary Fund to help the country avoid defaulting on its debt.
Greek Prime Minister George Papandreou officially asked for the activation of an EU-IMF debt rescue mechanism on Friday.
Papandreou made the request shortly before Finance Minister George Papaconstantinou leaves for Washington for talks with IMF Director-General Dominique Strauss-Kahn.
The three-year stand-by package by the European Union and International Monetary Fund is worth about 45 billion euros (60 billion dollars) at interest of about 5.0 percent in the first year.
But experts from the two bodies and the European Central Bank must still work out details of how the scheme would work.
Shortly before the announcement, German Economy Minister Rainer Bruederle said a knee-jerk reaction to the Greek crisis would be wrong, adding that Athens has not yet reached the point where aid is required.
"We are watching the situation closely and we are taking it seriously. But we will not make a knee-jerk reaction. That would be exactly the wrong reaction," Bruederle told the German parliament.
France 24's Christophe Robeet analyses Greek request for debt rescue plan
The members of the eurozone and the International Monetary Fund stand ready to come to Greece's aid "as a last resort", said Bruederle, whose government has been reluctant to help Greece.
"Until now, this situation has not happened," he said.
The announcement in Athens came in response to a new wave of pressures on Greece in the form of an EU upgrade of its huge public deficit for last year with possibly more to come because of doubts of Greek data, a ratings downgrade of Greek debt, and a surge in Greek borrowing costs to far above 8.0 percent.
Analysts on financial markets consider that Greece had no option but to ask for a rescue if it is to avoid default on part of its debt falling due in May and pay bills that come due during the rest of the year.
Pressure is also rising on the European Union and eurozone, because the cost of borrowing for Portugal also shot up on Friday. This was seen as a sign by analysts that a risk of contagion to other eurozone countries considered at risk is rising. The euro has fallen to its lowest values against the dollar for 12 months.
The International Monetary Fund warned on Wednesday of the risk that the Greek crisis could spread to other eurozone countries, prompting a sovereign debt crisis.
Date created : 2010-04-23