Greece clinches austerity deal but EU defers aid package

Posted By: Religare
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Greece clinches austerity deal but EU defers aid package
The European Union (EU) on Thursday deferred a decision on sanctioning a 130 billion euro second bailout fund to the struggling Greek economy even as the Greek leadership struck a deal on new austerity measures to seek the aid.

The EU leaders insisted that Greece must deliver on its latest austerity accord in order to seek the second rescue package, throwing the ball back into Greece's court.

"Despite the important progress achieved over the last days, we did not yet have all necessary elements on the table to take decisions today," Eurogroup President Jean-Claude Juncker said on Thursday.

Earlier on Thursday, Athens announced the agreement on new austerity measures required for securing the second rescue aid and avoiding a bankruptcy.

“Political leaders have agreed with the result of those negotiations", a statement from the Greek government said.

However, the latest round of austerity measures must be approved by the Greek Parliament this weekend before a decision on releasing the aid is taken, EU leaders said.

Moreover, they asked Greece to indentify further spending cuts to plug a hole of 325 million euro to ensure that the budget deficit target for 2012 was achieved.

“Thirdly, we would need to obtain strong political assurances from the leaders of the coalition parties on the implementation of the programme," the EU said.

“In short: no disbursement without implementation", EU added.

With the Greek leadership facing strikes and mounting opposition against wage and pension cuts, the Parliamentary vote on enforcing painful austerity measures may well determine the fate of Greece's euro membership.

“If we see the salvation and future of the country in the euro area, in Europe, we have to do whatever we have to do to get the program approved," Greek government said.

Dion Global Solutions Ltd

Read more about: euro zone, economy
Story first published: Friday, February 10, 2012, 13:31 [IST]
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