After weeks of negotiation and deliberation Greece have finally accepted the gravity of their debt and asked for the EU-IMF bailout to be put into effect.
Earlier in the week data was released which showed that Greece’s deficit was worse than previously suspected, and they have now made it known to the IMF that the 45million euro bailout package is to be activated.
Greek Minister of Finance George Papaconstantinou wrote a letter to Olli Rehn, the European Economic and Monetary Affairs Commissioner, Jean-Claude Juncker, the Prime Minister of Luxembourg and Chairman of the Eurogroup of eurozone finance ministers, and Jean-Claude Trichet, President of the European Central Bank. The letter said: “In accordance with the Statement of the Heads of State and Government of March 25, 2010 to provide financial support to Greece, when needed, and the follow up Statement of the Eurogroup, Greece is hereby requesting the activation of the support mechanism.”
The Eurozone and the IMF (International Monetary Fund) had previously planned out a bailout package that consisted of 30million euros from the eurozone contributing countries, and a further 15m from the IMF if required. It was originally thought that simply having the promise of a bailout would be enough to encourage investors to put in money and help Greece climb out of its 300bilion Euro debt however this was not the case and the bailout is now required.
Greek Prime Minister George Papandreou addressed his nation over a television broadcast, he explained that financial markets had not taken to the austerity measures he had put in place, he further explained that it was a matter of “national and pressing necessity” that Greece now have access to the bailout fund. He added that “Our partners will decisively contribute to provide Greece the safe harbour that will allow us to rebuild our ship”.
However even with the bailout, a bleak picture is being painted. Dominique Strauss-Khan, head of the IMF, said “It is clear that the Greek situation is a very serious one, there is no silver bullet to solve it in an easy manner”.
The level of debt that Greece announced as an annual deficit was 13.6 percent of GDP, compared to the 12.7 percent figure that was originally thought. Worryingly this figure could still increase as more accurate data is collected.
While the sum of the bailout has been agreed upon it is not yet known if any additional terms are to be attached to it; if there are such attachments they will likely be in the form of interest rates as opposed to further austerity measures.
The citizens of Greece have not dealt with all of this financial uncertainty well and protests have been held in Athens, some escalating into violent scenes of rioting between protestors and police.