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Bailout for Greece being planned by EU
by Anupreet Kaur - March 14, 2010 - comments
The problems in Greece is likely to weaken euro value, especially in countries suffering from debt crisis in euro zone like Portugal or Spain.
A multi-billion euros bailout is being planned by European Union (EU) for Greece, a country in debt since a long time.
A meeting is scheduled on March 15 and March 16 in Brussels to decide the bailout package.
The meeting will involve 16 finance ministers of “euro zones”, including Greece. Euro Zones refers to states using euro as currency.
Bailout package
The member states acceded to a bilateral contribution to help Greece if it is facing difficulty to to recover from debt.
Bilateral contribution will be in the form of loan or loan guarantee.
An aid to be made available by bailout could reach 25 billion euros, although some say the amount has not been decided. According to European Capitals, Greece may require 55 million euros by the year end.
Elmar Brok, a member of Merkel’s Christian Democrats in the European Parliament, said to Bloomberg.com “There is unity in the euro group on finalizing a package that can be used to help Greece. There’s a contingency plan to help Greece.” He further added that they will have to work on technical aspects.
The problems in Greece is likely to weaken euro value, especially in countries suffering from debt crisis in euro zone like Portugal or Spain.
Fiscal package
The fiscal package passed by the Greece government astonished everyone and led to street protests and strikes. It included a cut in salaries of civil servants, frozen pensions, 21 percent incerase in VAT and corruption and tax evasions on public agenda.
This fiscal pack is expected to decrease the deficit by 4 percent of GDP in the upcoming year.
Greece even decided to decrease budget deficit from 12.7 percent of GDP in 2009 to 8.7 percent GDP in 2010.
A 4.8 billion euros ($6.6 billion) package was passed this month to reduce 12.7 percent deficit by four percentage points, last year.
The 10 year Greek bond value also fell by 10 basic points to 6.25 percent. An increase was seen in euros in Frankfurt from $1.3681 to $1.3765.
Last month, a balance was seen in the Greek bonds as EU agreed to support Greece.
Christine Lagarde, French Prime Minister, told Reuters “There is no such thing as a bailout plan which would have been approved, agreed or otherwise, because there is no need for such a thing. But the "technical experts" at the EU have been working on a contingency plan, so that if the need arose "all we would have to do is press the button."