Final Greece rescue package days away: Spanish EU presidency

30th April 2010, Comments 0 comments

Greece's eurozone will conclude a deal on a full rescue package for the debt-ridden country in a few days that will calm financial markets, the Spanish EU presidency said Friday.

"We are in the final straight, there are just a few days more until the finalisation of all the contents of the accord and the support" (for Greece), Spanish Prime Minister Jose Luis Rodriguez Zapatero said.

He told a news conference such a deal "should calm the markets," which have been shaken by credit downgrades by ratings agency Standard and Poor's this week on Greece, Portugal and Spain.

Luxembourg Prime Minister Jean-Claude Juncker earlier Friday called an extraordinary meeting on Sunday of the Eurogroup, composed of Greece and its 15 euro partners, plus the European Commission and the European Central Bank.

The aim of the special meeting in Brussels is to greenlight three years worth of loans to Greece, some two thirds of which were to come from euro partners with the remainder from the the International Monetary Fund.

German lawmakers have said the total package would run to 120 billion euros (160 billion dollars), although the EU has so far only spoken of 30 billion euros plus 15 billion euros from the IMF for the first year.

Greece warned this week that it is in danger of defaulting on its debts if markets are allowed to sustain their attacks in the run-up to a critical May 19 deadline.

On Tuesday, Standard & Poor's downgraded Greece's sovereign debt to junk status.

The agency on Wednesday also slapped Spain, which holds the six-month rotating EU presidency, with a credit downgrade amid fears its recession could further weaken its public finances.

Zapatero Friday insisted that Spain remains "solvent" and pledged that reforms aimed at slashing the public deficit will be "strictly respected."

In January, Zapatero unveiled a 50-billion-euro austerity plan intended to bring the public deficit to within a eurozone limit of 3.0 percent by 2013 but many analysts argue more measures will be needed for this target to be met.

The Spanish economy, Europe's fifth largest, contracted 0.1 percent in the fourth quarter from the previous three months, even as the entire eurozone, the United States and Japan emerged from recession.

Official data released Friday also showed its jobless rate topped 20 percent in the first quarter.

© 2010 AFP

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