By DPA,
Athens : Greek Prime Minister George Papandreou said Greece faced a “difficult road” as he called for the activation of a European Union/International Monetary Fund aid package aimed at pulling the country out of a debt crisis.
“We are faced with a difficult road ahead…It is imperative that we ask for the activation of the mechanism,” Papandreou said while visiting the remote Aegean island of Kasterllorizo.
The prime minister said he already asked Finance Minister George Papaconstantinou to make a formal request for the plan’s activation.
Papandreou said he was forced to make the decision after the markets did not respond positively to Greece’s austerity measures causing interest rates to soar and that it is now a “national and pressing necessity” to call for the aid.
“Our partners will decisively contribute to provide Greece the safe harbour that will allow is to rebuild our ship,” Papandreou said from the picturesque port of Greece’s easternmost island.
Athens is currently negotiating details of a 40-45 billion euro aid ($52-58 billion) package with officials from the EU and IMF aimed at pulling the country out of a debt crisis which has shaken the euro.
The rescue package will provide Greece with loans of 30 billion euros from other eurozone countries at interest rates of about 5 percent and about 10 billion euros from the IMF.
The EU Thursday showed Greece’s 2009 budget deficit to be larger than expected, reaching 13.6 percent of GDP compared to a 12.9 percent figure given by Athens, and Moody’s cut the country’s credit rating by one notch, warning of further downgrades.
Despite the higher than expected deficit, the European Commission said Athens does not need a fresh round of austerity measures for 2010 but added that further cuts migh be called for in 2011 and 2012.
Greece is hard-pressed to raise about 10 billion euros by the end of May to prevent the country from defaulting.
Any decision to provide the eurozone loans, the biggest multilateral bailout ever attempted, would have to be made unanimously by all 16 governments in the currency zone, as well as the European Commission and the European Central Bank.
Reports say Germany, the greatest opponent of a Greek rescue, might block or delay the aid. Talk of a bailout is deeply unpopular in the country, where key elections in the largest state of North Rhine-Westphalia are to be held on May 9.
The Socialist government has already cut public sector pay and frozen pensions as part of its austerity programme. It has also hiked taxes to try to slash eight billion euros off a budget shortfall that amounted to 12.9 percent of the country’s GDP last year.
In reaction to the austerity measures, more than 10,000 demonstrators took to the streets in Athens and the northern port city of Thessaloniki Thursday in separate protests called by the country’s communist and largest public sector union.
Just over half of Greeks think going to the IMF for aid will hurt their country, according to a new poll released Friday.
Based on the poll conducted nationwide April 20-21, 96 percent of Greeks expect unemployment to rise while 71 percent believe social unrest is likely and 78 percent said it is better for Greece to stay in the euro zone.
Unemployment has jumped to a six-year high of 11.3 percent, up from 9.4 percent in the same month last year. A total of 567,000 jobs were lost, a 22 percent year-on-year increase.