Germany has called for a financial rescue arrangement to be ready for Greece by a May 19 debt deadline. The continuing uncertainty of the terms have pushed Athens’ borrowing costs to a 12-year high. While Germany pays three percent to borrow, Greece finds itself paying nine percent.
In the wake of Greek Prime Minister George Papandreou’s call for help to get out of a deep debt crisis, Chancellor Angela Merkel said: “It’s important that Greece prove it will take the necessary steps to get back its economic and financial strength in the longer term. It won’t take just one year; the IMF usually agrees on three-year programs.”
Greek efforts to reassure investors that aid will arrive in time to avert a first euro zone sovereign debt default have proved unconvincing. This has raised speculation that a 45 billion euro EU-IMF aid package should be bigger.
Greeks are preparing for sustained austerity measures: Athens has already announced billions of euros in budget cuts, including tax hikes and public sector wage reductions.
This has set off protests and strikes. The latest was of dock workers angry about moves to allow foreign cruise ships to moor at Greek ports without hiring Greek crews.
Athens has played down concern over Berlin’s backing IMF-euro zone rescue, a deal which faces domestic opposition in Germany.