Athens : Prime Minister George Papandreou warned Greece yesterday to prepare for major sacrifices after his government agreed to don a financial straitjacket in exchange for an unprecedented international bailout.
Papandreou announced the government had reached a deal with the European Union and International Monetary Fund to secure loans in return for deeply unpopular austerity measures in a desperate bid to beat bankruptcy.
"Today we endorse the agreement," Papandreou said in a televised address at the start of an extraordinary cabinet meeting.
"With our decision today, our citizens will have to make big sacrifices," he said, describing public anger at the new wave of austerity cuts as "evident".
Greece has been under heavy pressure to cut a massive public deficit that has rattled international markets and sparked fears of contagion to other heavily indebted European countries.
Price
Papandreou did not reveal the price of the agreement reached on Saturday, but French Finance Minister Christine Lagarde has said it could run from 100 to 120 billion euros (Dh488-586 billion, $133-$160 billion) over three years.
Visibly uneasy making the announcement on the morning after violent anti-government protests in Athens, the premier said the size of the bailout was "without precedent" in the world, but did not reveal how much it was worth.
He said that active and retired public sector workers would bear the brunt of the new wave of budget cuts, which the EU and the IMF had demanded as conditions for releasing the desperately needed loans.
After months of hesitation, euro zone countries decided to accelerate rescue efforts for Greece out of fear its debt crisis could pull down other members with severely strained public finances such as Portugal or even Spain. "Today the problem has taken on huge dimensions, today the fire risked extending not only to Greece but to the euro zone and beyond," Papandreou said. "The cost of extinguishing it is very high, and it's very high for Greek citizens."
The government, the European Union and the International Monetary Fund wrapped up negotiations on Saturday as 15,000 people swarmed through the streets of Athens in May Day protests against the austerity drive.
Anti-riot police fired tear gas at youths to contain clashes on the margins of the marches which Greek union leaders wanted to be a prelude to what they hope will be a crippling nationwide general strike on Wednesday.
The finance ministers of the 16-nation euro zone met in Brussels late yesterday to endorse the rescue deal.
Speaking after Papandreou's announcement, European Union Commission Jose Manuel Barroso recommended the aid package be activated, saying the austerity measures planned by Athens were "solid and credible".
