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Greek development aid package agreed
Economics

Greek development aid package agreed

2 min. 14.03.2012 From our online archive
The European Union said on Thursday it is prepared to help debt-saddled Greece by reducing Greek co-financing for EU development aid to 15 percent.

The European Union said on Thursday it is prepared to help debt-saddled Greece by reducing Greek co-financing for EU development aid to 15 percent.

European Commission President Jose Manuel Barroso made the announcement at an EU summit in Brussels on Thursday.

The European Commission has urged EU leaders to help Greece access billions in EU development funds to create jobs and make its businesses more competitive.

The funds are designed to help underdeveloped regions catch up with richer parts of the 27-nation bloc. About €15 billion is still available for Greece until 2013, but the country is struggling to prove it can use the funds well and come up with matching financing.

In a statement, European Union leaders called on the Greek government to show resolve in implementing the financial reforms necessary to get a new installment of bailout money, and pointedly urged all political parties in Greece to show their support.

Without the next €12 billion installment of its existing €110 billion bailout, Greece will default on its massive debt my mid-July. The country is also negotiating a second rescue package as it remains stuck in recession and locked out of international debt markets.

In a statement issued late Thursday, the leaders said the comprehensive package of reforms, which has drawn the ire of many Greeks, "must be finalized as a matter of urgency in the coming days" for the new funds to be disbursed.

But the leaders also made a stronger commitment to a second aid package, saying the promised austerity measures "will provide the basis for setting up the main parameters of a new program jointly supported by its euro area partners and the IMF."

EU President Herman Van Rompuy also said that leaders decided that the European Commission's bailout fund, the European Financial Stability Mechanism, won't be part of the new Greek bailout. That's a win for British Prime Minister David Cameron, who had strictly opposed using the €60 billion EFSM, which is backed by the EU budget.

Greek Prime Minister George Papandreou said "very important decisions" were made at Thursday's summit. "We got the support of our partners. This is not only a green light but a positive sign for the future of Greece," he said.

"I believe we are on a stable on a stable course. It is a difficult course for Greece," he told reporters after the summit.