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EU finalises Greek bailout

The eurozone has agreed a multibillion-euro bailout for Greece as part of a package to shore up the single currency after weeks of crisis, the Guardian has learnt.

world Updated: Mar 14, 2010 00:54 IST

The eurozone has agreed a multibillion-euro bailout for Greece as part of a package to shore up the single currency after weeks of crisis, the Guardian has learnt.

Senior sources in Brussels said that Berlin had bowed to the bailout agreement despite huge resistance in Germany and that the finance ministers of the “eurozone” — the 16 member states including Greece who use the euro — are to finalise the rescue package on Monday. The single currency’s rulebook will also be rewritten to enforce greater fiscal discipline among members.

The member states have agreed on “co-ordinated bilateral contributions” in the form of loans or loan guarantees to Greece if Athens finds itself unable to refinance its soaring debt and requests help from the EU, a senior European commission official said.

Other sources said the aid could rise to €25 billion, although it is estimated in European capitals that Greece could need up to €55bn by the end of the year.

Germany, the EU’s traditional paymaster, but the most reluctant to come to the rescue of a fiscal delinquent in the current crisis, has played the pivotal role in organising the rescue package, the sources added.

“There have been quite intensive preparations under the eurogroup. We have the ways and means to do it,” said the senior official, asking not to be named because of the subject’s sensitivity. The rules governing the operation of the single currency proscribe a bailout for a country on the brink of insolvency. Berlin, in particular, has been worried that any bailout of Greece could be challenged in its constitutional court.

The official said the deal — which will not involve any contribution from the UK taxpayer — had been tailored to respect bailout ban and avoid a supreme court challenge in Germany.