July 2, 2011
The euro area approved its share of a 12 billion-euro ($17.4 billion) aid payment for Greece and pledged to complete work in the coming weeks on a second rescue package for the cash-strapped nation to prevent a default and contagion.
Finance ministers agreed to disburse 8.7 billion euros of loans under last year’s 110 billion-euro bailout, rewarding Greek Premier George Papandreou for pushing an extra austerity plan through parliament. The International Monetary Fund is due to provide the rest of the July aid installment, the fifth under the 2010 package.
The spotlight now turns to a second bailout to which banks and insurers plan to contribute following German demands for taxpayer relief. Euro-area governments and investors will provide 70 percent of new aid that may total as much as 85 billion euros, with the IMF offering the rest, Thomas Wieser, an Austrian Finance Ministry official, said on June 30.
“The Greek authorities provided a strong commitment to adhere to the agreed fiscal adjustment path,” the 17 euro-area finance chiefs said in an e-mailed statement today after a conference call that was joined by the IMF’s acting chief, John Lipsky, and European Central Bank President Jean-Claude Trichet. “The precise modalities and scale of private-sector involvement and additional funding from official sources will be determined in the coming weeks.”
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