EUROZONE politicians moved to soothe markets by spelling out the terms of a rescue package for Greece yesterday, bringing a bailout of the heavily indebted country a step closer.
After a week that saw Athens’ borrowing costs driven up by frustrated bond investors, the 16 eurozone finance ministers agreed to lend Greece up to €30bn (£26bn) in emergency funding. Should the Greek government activate the package, the interest charge will be fixed at five per cent over three years – significantly below current market rates.
Luxembourg Prime Minister Jean-Claude Juncker said: “This is a step of clarification that markets are waiting for. It shows there is money behind this.”
Greek finance minister George Papaconstantinou rushed to say the country did not intend to use the European Union safety net. He described it as “a sort of gun on the table” to convince markets of the EU’s support after the yield on Greek bonds was forced up past the 7.5 per cent mark last week.
But analysts believe it is only a matter of time before Athens is unable to tap financial markets to fund itself. Michael Hewson of CMC Markets said: “Greece at some point will have to bite the bullet and ask for help.”
The news comes as Greece prepares to auction €1.2bn of Treasury bills tomorrow. It needs to find around €11.5bn to meet its repayment duties by May.
Two thirds of the bailout loans would come from eurozone countries, with members contributing in proportion to their shares in the European Central Bank. The remaining third would come from the International Monetary Fund.