EUobserver

Europe Plans $34 Billion Greek Bailout


As the largest eurozone member, Germany would contribute nearly 20 percent of the potential aid package, likely to take the shape of loans and guarantees.

The aid would be tied to strict conditions, with loan tranches only to be paid out once these are met. German officials denied the "speculation" however, according to other news sources, with the country's politicians sensitive to national doubts on the merit of the move.

EU leaders offered political support for Greece at an informal summit earlier this month, but financial markets have pressed for greater details of the bailout plan to be made public.

Estimates put Greece's total debt pile at about €300 billion, with roughly €20 billion of bonds to mature in April and May. Athens appointed a senior commercial banker on Friday as the new head of its debt agency, fueling speculation the government could try to raise €3-5 billion in the coming days.

EU finance ministers supported a package of Greek austerity measures last week, but coupled with rigorous monitoring from the European Commission. They also said supplementary measures were likely to be needed, following a mid-March progress checkup.

Athens has committed to cutting it budget deficit by four percent this year after it reached 12.7 percent in 2009, with civil servant salary freezes, bonus cuts and a two-year increase in the average retirement age among the list of cutbacks already outlined.

Despite high popularity ratings that have continued since elections last October, the centre-left Pasok administration has had to contend with a series of strikes from national unions as a result of the measures. Greek customs workers ended a five-day strike on Saturday, with the country's biggest union due to stage further protests this week.

No bailout requested, says PM

Despite beliefs that the economic reforms outlined by Greece could prove insufficient in tackling the country's debt problem, Greek Prime Minister George Papandreou insisted on Sunday his administration was not seeking a bail-out.

Instead he said Greece needed political support to enable it to borrow at the same interest rate as other euro area members.

"Give us the time, give us the support - and I'm not talking about financial but political support - in order to show you that what we're saying is being implemented and we are credible again," he told the BBC.

"We don't have at this point a need for borrowing. Our borrowing needs are covered until mid-March," he added.

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