European Leaders Poised to Adopt Second Greek Bailout

Posted July 21st, 2011 at 5:45 pm (UTC-5)
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European leaders have adopted another package of measures aimed at preventing Greece from defaulting on its huge public debt and stabilizing the common European currency.

The European Union and the International Monetary Fund said Thursday they will give Greece a second bailout worth about $155 billion. In addition, Greece will get voluntary loans from the private sector to help cover the financial gap.

Officials from the continent's 17 nations that use the euro met in Brussels Thursday. After the meeting, European Union President Herman van Rompuy and European Commission President Jose Manuel Barroso said participants unanimously supported a package they called a Marshall Plan for Greece to ensure the sustainability of its debt and prevent the crisis from spreading.

Greek Prime Minister Georgios Papandreou hailed the package as a solution that's good for the Greek people as well as for businesses.

IMF Director Christine Lagarde praised the determination of euro zone countries to support Greece and other struggling European economies.

In the past year, Greece — and later, Ireland and Portugal — were forced to secure international financial assistance from their European neighbors and the International Monetary Fund. But Greece, even after adopting austerity measures to cut spending and raise taxes, said it needs another bailout of about the same size as last year's $156 billion figure.

Leaders of the European countries using the euro said they have agreed on measures to prevent future crisis from occurring instead of acting after it happens.

They said Greece is expected to receive an estimated $53 billion credit from the private sector, to ensure that Greek banks can operate within the euro system. But those contributions will be voluntary. Euro zone leaders also pledged to provide adequate resources to re-capitalize Greek banks if needed.

But they stressed that private sector will not be involved in financial bailouts for other euro zone countries. Barroso stressed that Greece is an exceptional case that requires a unique solution.

In a statement, the leaders of 17 euro countries and their financial institutions said they are determined to continue to provide support to countries under EU financial aid programs, provided they commit to implement the necessary reforms. They welcomed Ireland's and Portugal's resolve to implement their austerity programs.