Euro partners agree on Greek bailout

May 3, 2010 at 12:00a.m.

Associated Press

BRUSSELS

European governments and the International Monetary Fund on Sunday committed to pull Greece back from the brink of default, agreeing on euro110 billion in emergency loans on the condition Athens make painful budget cuts and tax increases.

The rescue is aimed at keeping Greece from defaulting on its debts and preventing its financial crisis from infecting other indebted countries just as Europe is struggling out of recession.

After chiding Athens for years of mismanagement and cheating on their budget reporting, the IMF and Greece’s 15 partners that share the euro currency rewarded Prime Minister George Papandreou for tough measures including cuts in civil servant’s pay.

“I have done and will do everything so the country does not go bankrupt,” Papandreou told a nation which now faces years of painful belt-tightening after years of overspending.

France, Greece’s most sympathetic partner, agreed there was no other choice.

“It’s a very harsh plan because there was a lot of laxity,” Finance Minister Christine Lagarde said.

But even Germany, long the fiercest critic of Greece’s boundless spending, saw the need to back a euro-partner in such dire need — if only to keep the shared currency out of more trouble. The crisis is already threatening other eurozone countries with huge financial problems, including Portugal and Spain.

“It is not an easy decision, but there is no alternative,” German Finance Minister Wolfgang Schaeuble said after the eurozone finance ministers approved the package in an emergency meeting in Brussels.