20th Mar 2018

Greece formally requests EU-IMF aid

  • Euro area states have pledged to give up to €30 billion this year (Photo: mammal)

Greece has formally placed a request to activate a €40-45 billion EU-IMF aid package, a day after new budget deficit figures revealed the country's 2009 shortfall to be worse than previously forecast.

The country's finance minister, George Papaconstantinou, transferred the message on Friday (23 April) in a letter addressed to Eurogroup President Jean-Claude Juncker, EU economy commissioner Olli Rehn and European Central Bank President Jean-Claude Trichet.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

"In accordance with the Statement of the Heads of State and Government of 25 March 2010 to provide financial support to Greece, when needed, and the follow up Statement of the Eurogroup, Greece is hereby requesting the activation of the support mechanism," reads the letter.

Earlier, Greek Prime Minister George Papandreou said he would instruct his finance minister to place the request. "It is a national and imperative need to officially ask our partners in the EU for the activation of the support mechanism we jointly created," he said in statements broadcast live from the remote Aegean island of Kastellorizo.

"Our partners will decisively contribute to provide Greece the safe harbour that will allow us to rebuild our ship," said the embattled premier against a picturesque backdrop.

Fresh figures released by the EU's statistics office, Eurostat, on Thursday revealed Greece's 2009 deficit to be 13.6 percent of GDP, significantly higher than the previous 12.7 percent forecast.

Markets subsequently leapt on the new EU data, sending the yield on 10-year Greek bonds to 8.83 percent, the highest since 1998, and prompting credit rating agency Moody's to cut the country's sovereign rating from A2 to A3. On Friday, bond yields retreated marginally following the formal aid request.

Next steps?

A significant amount of uncertainty remains however. Greece, swamped by a €300-billion debt pile, is currently negotiating the lending terms with EU and IMF officials in Athens, with the talks potentially lasting for several more weeks.

An agreement between EU leaders in late March indicated that any request for aid must first be approved by the ECB and the European Commission, before then being formally agreed by euro area states.

While governments may be willing to bail-out their profligate partner, doubts remain as to how quickly member states will be able to release the funds, with at least one legal challenge being mounted in Germany against the unpopular transfer to Greece.

Responding to questions from MEPs in Strasbourg on Tuesday, Commission President Jose Manuel Barroso said several times that he is confident the Greek plan does not breach the EU treaties. The solution found so far is "fully in line with the treaty," he said. "It is simply wrong to say that it is some kind of bailout."

Chancellor Angela Merkel, faced with crucial regional elections in May, has been at pains to stress that any support must be considered 'ultima ratio', or a last resort.

As well as the legal uncertainty, total contributions to the three-year support package have yet to be finalised. Euro area states have agreed to contribute €30 billion, this year, but figures for 2010 and 2011 remain unclear.

German central bank chief Axel Weber recently conceded that "the numbers are changing all the time", according to reports in the Wall Street Journal, adding that total euro area contributions over the three years could reach as much a €80 billion.

Merkel in Paris for eurozone reform talks

Angela Merkel - who started her fourth term as Germany's chancellor earlier this week - is wasting no time on big issues like eurozone reforms. On Friday she is meeting Emmanuel Macron where the two will seek common ground.

EU insists on US tariffs exemption

Europe is "an ally, not a threat", the EU Commission says - as the US is poised to impose duties in steel and aluminium. Common action on Chinese steel overcapacity could help diffuse the crisis.

Trump starts countdown to EU trade war

EU sales of steel to US to face 25 percent tariff from 23 March, with Europe to hit back on motorbikes and bourbon in looming trade war.

VW dismisses complaints on Dieselgate fix

'I think customers who want to get information (...) are able to receive information if they want," VW management board member Hiltrud Werner told EUobserver. Consumer groups disagree.

Stakeholders' Highlights

  1. EUobserverHiring - Sales Associate With 2+ Years Experience - Apply Now!
  2. EUobserverHiring - Finance Officer With Accounting Degree or Experience - Apply Now!
  3. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  4. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  5. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  6. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  7. Martens CentreEuropean Defence Union: Time to Aim High?
  8. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  9. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  10. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights
  11. ACCAAppropriate Risk Management is Crucial for Effective Strategic Leadership
  12. EPSUWill the Circular Economy be an Economy With no Workers?