Eurozone’s 30 bln for Greece

Struggling to cope with the high cost of borrowing, Greece was tossed a financial lifeline by the eurozone yesterday, when finance ministers agreed in a teleconference to provide Athens with emergency loans of up to 30 billion euros. Although some technical details still need to be ironed out, it was announced in Brussels that the terms of the rescue package had been agreed. Luxembourg Prime Minister and Eurogroup chairman Jean-Claude Juncker said that Greece would receive the money in the form of bilateral loans that would be coordinated by the European Commission and paid through the European Central Bank (ECB). «If the mechanism had to be activated, it would not be a violation of the no-bailout clause (in the European Union treaty) since the loans are repayable and contain no element of subsidy,» he told reporters. European Economic and Monetary Affairs Commissioner Olli Rehn said loans would carry an interest rate of about 5 percent. Last week, the yield on Greek 10-year bonds rose above 7.5 percent, its highest since 1998. Rehn also said that the Washington-based International Monetary Fund (IMF) would make a «substantial contribution» to the deal, probably about 10 billion euros. Greece intends to auction 1.2 billion euros of government bonds this week as it seeks to raise about 11 billion euros by the end of May to refinance debt and meet interest charges. The announcement in Brussels was welcomed in Athens. «A very important decision has been made,» said Finance Minister Giorgos Papaconstantinou. «The Greek government has not asked for the activation of the mechanism, although it is immediately available. «We believe that we will be able to continue borrowing on the markets without any obstructions.» Papaconstantinou said that as of today, Greece would participate in a joint technical commission with the EU, ECB and IMF to finalize how the mechanism would work.

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