14 MAR 2011
Wall Street Journal
BRUSSELS—Greece is relieved after its European Union partners agreed to cut the interest rate on its bailout loan and give it access to an emergency fund, but the favor came with strict conditions to carry on with a highly unpopular austerity program and kick off the biggest selloff of public property in the country's history.
"Our efforts so far were recognized, so we got both a longer repayment period for our loan and a lower rate. It's the first good news in a very long time. But the challenges ahead remain huge. The Greek people are angry with the unprecedented belt tightening and we must also get €50 billion from privatizations in the next five years," a senior Greek government official said over the weekend. "Beyond the logistical challenge, privatizations are always unpopular in Greece. So the anger will grow."
Euro-zone leaders agreed Friday to extend the repayment period of the €80 billion Greece got from its European Union partners to 7.5 years from three years and more importantly to slash the interest rate to 4.8% from 5.8%. This will save the debt-ridden country around €6 billion in interest.
Greece got that loan, plus €30 billion from the International monetary Fund, last May when it was on the brink of default. In exchange, Athens embarked on a series of austerity measures to bring down its budget deficit from 15.4% of gross domestic product in 2009 to below 3% by 2014.
The euro-zone leaders also agreed that bailed out EU countries can sell their bonds directly to a fund called the European Financial Stability Facility if they are unable to tap the international bond market.
The deal came after commitments by Greece to sell, rent or lease state land and businesses over the next five years which will earn state coffers €50 billion.
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