Global General
Merkel: $29.6B in aid for Greece planned
(Agencies)
Updated: 2010-05-04 09:32
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Finland will pay euro1.6 billion. Lawmakers there are expected to vote on the package within a week and likely to approve it since the center-right coalition government has a clear majority in Parliament.
Mainstream Dutch political parties said Monday they would support the Netherlands' government paying its euro4.8 billion share of the Greek bailout package.
German Finance Minister Wolfgang Schaeuble said he would hold talks with key players in Germany's banking industry Tuesday, including Bundesbank President Axel Weber and Josef Ackermann, chief executive of Deutsche Bank AG, Germany's biggest bank.
The talks, he said, will be aimed at convincing market players of the solidity of the Greek austerity program.
Greece announced more austerity measures on Sunday worth euro30 billion ($40 billion) through 2012 -- including public service and pension pay cuts and higher taxes. In response, about 1,000 garbage collectors and other striking municipal workers marched to the Greek parliament on Monday, chanting "trash for parliament, not the landfill!"
But Prime Minister George Papandreou insisted the new measures are vital for Greece's financial survival.
"This is a chance for a fresh start," Papandreou said Monday. "We are making changes that should have happened years ago."
The ECB, the central bank for the 16 nations that use the euro, said Monday it was suspending the minimum credit rating requirement for all existing and new debt instruments "issued or guaranteed by the Greek government."
The decision by the Frankfurt-based bank ensures that Greek debt can be used as collateral in ECB lending operations, despite the fact that Standard & Poor's cut Greece's rating to junk status last week.
"Clearly, desperate times call for desperate actions, and today's ECB decision is one step in the right direction," analysts with the Royal Bank of Scotland wrote in a research note.
Analyst Marco Annunziata of UniCredit Group in London sharply criticized the ECB's move as "compounding the already significant damage done to the credibility of euro zone institutions."
Greece's new austerity measures are expected to exacerbate its recession, but the massive rescue plan will include euro10 billion ($13.3 billion) for a "stabilization fund" to support Greek banks, Greece's Deputy Finance Minister Philippos Sachinidis told state television on Monday.
In Paris, Lagarde defended the bailout, telling Europe-1 radio it is "not a donation, it is not a subsidy" but a loan to push Greece to clean up its public finances. She was presenting a budget amendment later Monday to the lower house of parliament allowing the government to release French aid funds for Greece.
Lagarde also said she will authorize France's market regulator to closely monitor ratings agencies, which EU officials have blamed for fueling the Greek debt crisis.
Greek labor unions, upset over a new round of spending cuts, have planned another general strike for Wednesday.
"These cuts will kill our income. Pensions in Greece are already very low," said Dimos Koumbouris, head of a pensioners' association, told the AP.
He feared the austerity measures, which cut back on holiday bonuses paid to public servants and pensioners, will force them to curtail their spending.
"Many retired people wait for their holiday bonuses to buy clothes and even extra food," he said. "How will these people get by now?"
Greek Finance Minister George Papaconstantinou said the austerity program will hurt.
"There is no doubt that it is a very difficult program ... that will hurt a lot of people who have no responsibility for what happened," he said. "But ... the choice is very simple. Either that plan, or have the country lined up against the wall."
In Frankfurt, the DAX index was up nearly half a percent to 6,163. The Athens Stock Exchange opened up on the news of the loan agreement, before dropping back and closing down 0.9 percent at 1,854. Spreads on Greek bonds were down to 574 from above 600 in the morning.
