A senior European Union official says he expects the 17-nation eurozone to provide debt-ridden Greece with another $17 billion to prevent a Greek debt default that could further destabilize global financial markets.
EU Economic Affairs Commissioner Olli Rehn said Thursday he is “confident” that eurozone finance ministers will agree to disburse the funds at a meeting that begins Sunday. The funds would represent the latest installment of a $160-billion bailout package offered to Greece last year by the European Union and International Monetary Fund.
The IMF said it is ready to continue supporting the Greek economy provided that Athens adopts the economic reforms it promised in return for the financial aid. White House spokesman Jay Carney said it is important that the Greek government carries on with those reforms.
Socialist Greek Prime Minister George Papandreou has asked parliament to approve the austerity measures, which include another round of tax hikes, spending cuts and state asset sales. But the plans have drawn outrage from many Greeks who say they have sacrificed enough. Opposition conservatives and even some Socialists have criticized the package.
The Socialist government has warned that it may default on its debt unless it secures the $17-billion loan installment next month.
Prime Minister Papandreou said Thursday he will keep trying to achieve consensus on the reforms with the opposition, despite the collapse of talks a day earlier on forming a national unity government. Published reports said he was expected to reshuffle his Cabinet later Thursday to help with that effort.
Mr. Papandreou was speaking to a parliamentary caucus meeting called by Socialist critics of his policies.
Earlier in the day, two ruling party deputies resigned in protest at his handling of the crisis. The vacated seats will go to fellow Socialists and will not affect the ruling party's slim five-seat majority in the 300-member parliament.
Greek lawmakers are expected to hold a confidence vote within days of the new government being announced.
EU officials have been discussing the terms of a second bailout for Greece to keep the eurozone member's economy afloat in the longer term. But EU Commissioner Rehn says no decision is expected on that issue until July at the earliest, due to disagreements about how much the private sector should contribute to a new rescue package.
French President Nicolas Sarkozy said Thursday EU nations must compromise to protect the euro, whose value has weakened against major currencies due to concerns about the Greek debt crisis.
Tens of thousands of Greeks rallied Wednesday in Athens and Thessaloniki to oppose the government's new austerity plans. The protest in Athens' Syntagma Square turned violent when riot police fired tear gas at demonstrators who threw stones and fire bombs. Authorities said dozens of people were injured, and at least 16 protesters were arrested.
