Greek bailout

Germany and France have ramped up the pressure on Greece to impose further austerity measures as a condition of approving a joint aid package from the International Monetary Fund and European Union.

German Finance Minister Wolfgang Schaeuble said that to get approval from Berlin and the EU, Greece would have to carry through with even tougher economic restructuring as "an absolute prerequisite." He emphasized that a "yes" was not guaranteed.

"The fact that neither the EU nor the German government have taken a decision [on providing aid] means the response can be positive as well as negative," Schaeuble told the German newspaper Bild in its Sunday editions.

"This depends entirely on whether Greece continues in the coming years with the strict savings course it has launched. I have made this clear to the Greek finance minister."

Germany, as the biggest economy in the eurozone, would bear the largest share of the EU aid package, contributing a loan of around 8.4 billion euros ($11.2 billion) from the KfW public bank, backed up by guarantees from the federal government.

German leaders, facing a key regional election in May, are under intense pressure to hold a hard line against Greece, with some members of the ruling conservative Christian Democrats even calling for Greece to be kicked out of the eurozone.

French Finance Minister Christine Lagarde described the aid proposal as a "cocktail of indulgence and great strictness" in an interview with the French weekly Journal du Dimanche that Greek finances would need close monitoring.

"We will [release the aid] according to their needs and in the case of default on repayment, we will immediately put the foot on the brake," Lagarde said.

Greece 'shouldn't fear the IMF'

At meetings in Washington on Saturday, EU and IMF officials met with US Treasury Secretary to address the speed of rescue efforts for Greece, with time running out for Athens to pay off its debts.

On Friday, Greece asked for an EU-IMF bailout of its debt-ridden economy.

"Secretary Geithner encouraged the parties in attendance to move quickly to put in place a package of strong reforms and substantial concrete financial support," a US treasury statement said afterwards.

IMF managing director, Dominique Strauss-Kahn, promised the fund would "move expeditiously" in response to Greece's appeal for help and also addressed public opposition to the bailout.

"Greek citizens shouldn't fear the IMF. We are there to try to help them," Strauss-Kahn said.

However, time is running out for Greece, as it is on the precipice of becoming the first eurozone member to default on it debts. Lenders are expecting 8.2 billion euros ($11 billion) from Athens by May 19.

EU satisfied, Germany skeptical

On Friday, Greece ended weeks of speculation that had permeated the eurozone by asking the EU and IMF for 45 billion euros to cover its looming debts, which are believed to total some 300 billion euros.

The EU says it sees "no obstacles" to Athens' request to activate a three-year joint EU-IMF rescue loan, which would offer interest rates of about 5.0 percent, far below the levels being demanded by private lenders.

EU economic and monetary affairs Commissioner Olli Rehn said that EU members had worked intensively on putting together the Greek rescue package and that it "should be complete by early May."

svs/glb/AFP/Reuters
Editor: Kyle James