- The Washington Times - Sunday, April 11, 2010

BRUSSELS (AP) — Greece’s European partners tossed a financial lifeline Sunday to Greece, offering 30 billion euros ($40.49 billion) in loans this year to help ease a debt crisis that has raised the country’s borrowing costs and slammed Europe’s common currency.

The International Monetary Fund would make a “substantial contribution” as well, probably about 10 billion euros ($13.5 billion), said Olli Rehn, the European Union monetary affairs chief.

He said the funds will be available if Greece makes a formal request for financial assistance, something it has not done yet.

In an emergency video conference, Mr. Rehn said that the finance ministers of the 16 eurozone nations agreed that the loans would carry an interest rate of about 5 percent — less than commercial market rates but more than beneficiaries of the IMF usually pay.

“This is certainly no subsidy” to Greece, he told a news conference.

He said EU and IMF officials will meet tomorrow to work out details of the loan deal, especially for lending in the years ahead.

Greece has been spending beyond its means for years, leaving it with a 2009 budget deficit of 12.9 percent of economic output. The revelation of its statistics fudging has slammed the euro and gutted market confidence, fueling higher borrowing costs.

Athens plans to cut its deficit to 8.7 percent this year and has launched a 4.8 billion euro ($6.48 billion) austerity program cutting public sector wages, freezing pensions and hiking taxes.

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