Greek Prime Minister George Papandreou has asked European governments and the International Monetary Fund for 45 billion euro in emergency loans because of his country’s debt crisis.
In a live televised address to the Greek people from the remote Aegean island of Kastellorizo, Papandreou called it “a national necessity and priority.”
He said the financial markets have not given them the time needed to turn the economy around and the skyrocketing cost of borrowing for the Greek government threatened to wipe out the effect of painful austerity measures.
But experts warned this was only a short term solution. Financial analyst Vagelis Agapitos said: “The rescue plan will infuse liquidity into the system, much needed liquidity. It will buy Greece time. However, Greece needs to solve its own problems by passing painful structural reforms.”
Greece is currently negotiating with EU and IMF officials on the terms of the largest state bailout ever attempted as well as what it needs to do to get loans in 2011 and 2012.
Germany, which as the biggest and strongest euro zone economy, is central to the rescue.
Chancellor Angela Merkel is facing domestic opposition to a Greek rescue and also has to heed voter opinion with a vital regional election due in early May.
She remains cautious and told reporters: “Let me say that it is impossible today to get a clear picture about the amount and the true figures of the financial aid, because the negotiations are still ongoing.”
Merkel added the stability of the euro is at stake.
The aid request did lead to a fall in Greece’s borrowing costs and push up bank shares on European stock markets but provided only limited support to the badly battered euro.
On the streets of Athens some Greeks disagreed with their government’s decision to activate the EU/IMF aid mechanism.
Businessman Pericles Kavoursa said: “We have given everything and it still has come to naught. I am afraid of what will happen.”
But civil servant Makis Lefkaditis had a wry observation. He said: “I am comfortable with it, Greece will never die. We may just bankrupt the International Monetary Fund too, Greece seems to be good at that.”