Page last updated at 12:07 GMT, Saturday, 13 March 2010

EU close to Greece bail-out deal, officials say

A demonstrator pulls another protester away from riot police during clashes outside the Greek parliament in Athens on 5 March 2010
Greece has been convulsed by strikes and protests

The EU is poised to reach agreement on a potential multi-billion euro bail-out for Greece after weeks of crisis, senior officials have told the BBC.

They say the rescue package would be available if Greece asked for assistance to finance its huge deficit.

Eurozone ministers are expected to finalise a proposal setting out a range of options as early as Monday.

Greece has not requested help so far. The EU says no deal has been agreed but technical work is continuing.

Greece is struggling to deal with a 300bn euro ($419bn; £259bn) debt. It needs to raise about 20bn euros ($27bn) on bond markets to refinance debt maturing in April and May.

Its deficit is more than four times higher than eurozone rules allow. Austerity measures aimed at reducing it have provoked public anger. The crisis has also undermined the euro.

The Greek case is a potential turning point for the eurozone

Olli Rehn
EU commissioner

The BBC's Gavin Hewitt in Brussels says the hope is that the proposed deal will be there as a last resort, and the funding will not actually be needed.

Germany and France would be the main backers, with no contribution from Britain and other non-euro countries, our correspondent adds.

European media reports say options being considered include the provision of loans to Greece and a bond issue guaranteed by eurozone countries.

Officials are quoted as saying that the aid could amount to 25bn euros.


Any potential rescue package will be hugely controversial in Germany where there is strong opposition to helping Greece, our correspondent adds.

It would also have to avoid the possibility of a challenge from country's supreme court.

Greek Prime Minister George Papandreou in Berlin on 5 March 2010
Greece's PM has been trying to drum up support for austerity measures

The German finance ministry denied the reports on Saturday. Reuters news agency quoted a ministry spokesman as saying: "We are not aware that this is being planned."

European Commission spokesman Jonathan Todd said: "The commission stands ready to act if necessary. Technical work is ongoing and has not yet been concluded. All the rest is speculation."

Alongside the relief package, the commission is working on tougher rules to monitor fiscal discipline among eurozone countries, said Olli Rehn, the commissioner for economic and monetary affairs.

"The Greek case is a potential turning point for the eurozone," he told the Guardian newspaper, adding that failure would "do serious and maybe permanent damage to the credibility of the European Union".

The deal would have to be constructed to get around rules governing the euro currency which prohibit a bail-out for a country on the brink of insolvency.

Greece's austerity measures have sparked protests and nationwide strikes.

European Union rules state that no nation in the euro bloc should have an annual budget deficit which is higher than 3% of its gross domestic product.

Greece has pledged to reduce its deficit from 12.7% to 8.7% during 2010. Its long-term plan aims to cut the budget shortfall drastically, to less than 3% by 2012.

European debt and deficit figures

Print Sponsor

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific