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Thursday, May 6, 2010

Greece's only hope of avoiding bankruptcy is to take money from a joint EU and International Monetary Fund rescue package

ATHENS, Greece – Greece's only hope of avoiding bankruptcy is to take money from a joint EU and International Monetary Fund rescue package, the finance minister said Thursday during a heated Parliamentary debate overshadowed by the deaths of three people during protests against spending cuts.

Greece has to impose harsh austerity measures, including slashing salaries and pensions and increasing taxes, in order to get money from the three-year package, which will provide the country with loans from other eurozone countries and the IMF. But the cuts have sparked outrage, with an estimated 100,000 people spilling onto the streets of Athens during a nationwide general strike Wednesday to protest the measures.

Demonstrations quickly turned violent, with protesters clashing with police in extensive riots. A man and two women — one of whom was pregnant — died when they became trapped in a burning bank torched by protesters.

Finance Minister George Papaconstantinou said the government had no choice but to impose the austerity measures, which were being rushed through Parliament to a vote later Thursday.

Papaconstantinou said the draft bill was tabled as urgent legislation because the country was two weeks away from default, with euro9 billion worth of bonds maturing on May 19.

"The state's coffers don't have that money," Papaconstantinou said. "Because today ... the country can't borrow it from the international market. And because the only way for the country to avoid bankruptcy and suspension of payments is to take the money from our European partners and the International Monetary Fund."

But in order to receive the money, Greece must agree to a three-year austerity program, he added.

"The government has the responsibility of implementing the most difficult financial measures ever taken in this country. It is a program which requires effort and sacrifice, and obliges us morally and politically to succeed," Papaconstantinou said, describing the rescue package as "our country's last hand."

"We are asking for loans from countries that also have deficits and from countries that are also the subject of speculative attacks. And for those to be granted, we must persuade them that we are putting our house in order," he minister said.

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