By DPA,
Athens/Brussels : Greece sealed a multi-billion euro bailout deal with the European Union and International Monetary Fund Sunday with a promise to cut its deficit by 30 billion euros over three years.
Warning that the financial plan would require major sacrifices from the Greek people, Prime Minister George Papandreou said he would “do anything to avoid the country going bankrupt”.
“Every Greek will be called upon to make great sacrifices to avoid disaster,” he added.
The bailout deal, which is aimed at containing a debt crisis that has shaken markets worldwide, would be ratified later Sunday, Papandreou said.
“It is an unprecedented support package for an unprecedented effort by the Greek people.”
The package, expected to total up to 120 billion euros ($160 billion) over three years, will be the first such rescue of a member of the 16-nation eurozone.
Eurozone finance ministers have scheduled an emergency meeting later Sunday in Brussels to approve the EU’s share of the deal.
Finance Minister George Papaconstantinou said the agreement foresees Greece’s budget deficit to fall below 3 per cent of gross domestic product (GDP) by 2014.
Under the deal, Greece plans to cut the deficit to 8.1 percent of GDP in 2010, 7.6 percent in 2011 and 6.5 percent in 2012.
“We have all been called on to make a choice …the choice is between coming up with structural reforms or reaching an absolute dead end,” Papancontantinou said.
He said the measures which the government would implement included hiking value added tax from 21 to 23 percent, reducing public sector salaries and pensions and a 10 percent fuel and alcohol tax hike.
Greece would be protected from exposure to debt markets for three years under the plan, he said.
Greece has been guilty of free-spending ways for decades, running up debt equal to 115 percent of GDP. However, the revelation that official government statistics had also been massaged before and after joining the single European currency added to the sense of crisis.
By agreeing a programme of austerity measures with the EU and IMF, Greece has met conditions set for emergency loans, the European Commission said Sunday.
The commission had been asked to judge whether Athens had asked for EU/IMF help as a last resort, a precondition set in March by EU leaders on Germany’s insistence.
Commission President Jose Manuel Barroso confirmed the hurdle had been cleared, just a few hours before euroarea finance ministers were expected to meet in Brussels to finalise the deal.
“The Commission considers that the conditions for responding positively to the request by the Greek government are met and recommends that the coordinated European mechanism for assistance to Greece be activated,” Barroso said in a statement.
He stressed that the spending cuts and the structural reforms Greece committed itself to “constitute a solid and credible package”.
Barroso said the loans would “be decisive to help Greece bring its economy back on track and preserve the stability of the euro area” and would show the EU’s determination “to act in a spirit of solidarity and responsibility”.
Even if the measures are enough to stop the crisis from sinking other fragile EU economies, the future remains stormy in Greece as public resistance to more cuts may hamper implementation of the reforms.
Angry protesters and riot police clashed in central Athens Saturday after thousands took to the streets in May Day rallies to signal their opposition to plans for the harsh public spending cuts.
According to a recent poll, in a country where one in five lives below the poverty line, more than half of respondents said they would take to the streets if the government agrees to new austerity measures.
Athens had insisted it needed help by May 19, the day it is expected to issue a 9-billion-euro bond issue to refinance its debt, in order to avoid a default that could spread to other eurozone countries with immediate deficit crises, such as Portugal and Spain.
But unions, already reeling from austere budget cuts, called a new round of strikes for May 5 to protest against cuts foreseen for 2011 and 2012, saying they impose most of the sacrifices on low to middle income workers.
The public sector union ADEDY, which represents half a million workers, has also called a four-hour strike for Tuesday, on top of a nationwide strike already decided for Wednesday.