Greece needs to fulfil all terms to get bailout funds

European governments and political leaders have welcomed the latest austerity package passed by the Greek parliament to avert a bankruptcy, but insisted that fresh bailout funds will be made available only after it fulfils conditions it had agreed with the EU and the IMF.

German Chancellor Angela Merkel has described Sunday night's vote in the Greek parliament in Athens on a new round of tough austerity measures overshadowed by violent protests as a "very important" step towards resolving the two-year old Greek debt crisis.

However, there will be no easing of the level of spending cuts demanded by the EU and the IMF in spite of the massive public opposition to those measures, she told journalists in Berlin yesterday.

Those measures negotiated by the "Troika" inspectors of the EU, the IMF and the European Central Bank with the Greek government are necessary to reduce Greece’s debt burden to at least 120 per cent of the GDP by 2020 so that it can return to the capital markets as well as to stimulate economic growth by improving its competitiveness, Merkel said.

"This package makes it clear that it is not just about savings, but also about structural reforms," she said.

"There cannot be and will not be any changes to that." It envisages savings of up to 3.3 billion euros by slashing the posts of 15,000 civil servants this year as part of a long-term plan to reduce 150,000 public sector jobs by 2015 and by reducing minimum wages by 22 per cent to around 600 euros a month.

Salaries will be frozen until the number of unemployed drops to 10 per cent from the present level of 19.2 per cent and pension in sectors such as banks and telecommunication as well as all supplementary pensions will be axed by up to 15 per cent.
They also want all major political parties in Greece to give a written undertaking that the austerity package will be implemented regardless of who will come to power after the parliamentary election in April.
The Greek government also will have present a clear plan on how it intends to raise additional savings of 325 million euros promised to the EU and the IMF. The EU and the IMF have set Greek parliament’s approval of the austerity package as condition to release a second rescue package of 130 billion euros (USD 170 billion) offered in October, last year.

Olli Rehn, the EU Commissioner for Economic and Monetary Affairs, hailed the Greek endorsement of the austerity package as an expression of the determination of the Greek people to put an end to the "spiral of un-sustainable public finances and loss of competitiveness."
He called upon the Greek government and all major political parties "to take full ownership and make case" for the second bailout programme and to fully implement it. 

The conditions attached to the second bailout package will be very demanding, but they will help the country to return to sustainable growth and employment, Rehn said in a press statement.
"In any case, Greece should have implemented most measures to balance its economy and to boost sustainable growth and employment even in the absence of such a programme already several years ago," he said.
German Finance Minister Wolfgang Schaeuble said the austerity measures demanded by the "Troika" are not intended to "torture anyone" in Greece, but to help the country to return to sustainable economic growth and competitiveness.
"This is not a measure against the weaker sections of the Greek society, but it is intended to open up employment chances and reasonably well economic conditions for everyone in Greece," he told journalists in Berlin.
German Economics Minister Philipp Roesler described the vote in Athens as an “important step forward in the right direction. As part of the second bailout package, Greece will have to reach an agreement with its private creditors on writing down around 100 billion euros from its total debts of 350 billion euros in a bond swap.

Greece became the first eurozone to be rescued from the brink of bankruptcy when it received a 110 billion euro bailout from the EU and the IMF in May, 2010. The proposed second rescue package will come from the European Financial Stability Facility (EFSF), the EU’s temporary bailout fund, which was set up in June, 2010 to prevent the Greek debt crisis from spreading to other debt-ridden nations in the euro zone.

The eurozone finance ministers are set to discuss details of the proposed second bailout package in the wake of the Greek parliamentary vote at their meeting in Brussels on Wednesday evening, but they are expected to leave a final decision for the EU leaders, who will be holding a summit two weeks later. 

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