Chancellor Angela Merkel’s Cabinet agreed on Monday on a bill to give Greece euro 22.4 billion ($29.6 billion) over three years as part of a wider bailout, as the German government realised that letting Greece go bankrupt could send the euro into a tailspin and hurt Germany’s own economy.
Merkel said the money would not only help Greece, which has been battered by the bond markets, but would help the “stabilisation of the euro as a whole and, therefore, help the people of Germany.” The remark was a nod to the popular discontent in Europe’s biggest economy about having to pay so much to help a fellow European Union country that many Germans feel has been fast and loose with its finances for years.
The European Central Bank, meanwhile, suspended its rating limits on Greek debt.
Both moves were mandatory after European governments and the International Monetary Fund agreed Sunday to give euro110 billion ($145 billion) in loans to Greece over three years. The loans came after Athens adopted a new round of austerity measures that provoked fresh uproar among Greek workers.
IMF officials say Greece could start receiving money from the rescue package in about a week.
Germany will contribute euro8.4 billion ($11.1 billion) for the first year of the bailout this year, followed by euro14 billion ($18.5 billion) over 2011 and 2012.