greek government accepts emergency loan from private banks
News Posted On: 18 December 2009
The government has decided to take an emergency 2 billion-euro loan from private banks in an attempt to deal with its huge budget deficit and growing debts, local media reported on Wednesday (December 16th).
The loan will have an annual interest rate of 2.5% -- significantly lower than the average interest rate of 3.3% -- will be paid off in five years. The government is expected to receive the money on January 4th.
Meanwhile, the government and opposition met to discuss the economic crisis following Prime Minister George Papandreou's announcement of stiff spending cuts. He asked all parties to support the measures to pull the country out of the crisis.
Papandreou says party leaders reached an agreement on several key points despite ideological differences. One rallying point with which all party leaders agreed is to tackle significant levels of corruption.
Greece has among the largest budget deficit's in the world, with several successive government's not only failing to reduce the deficit but managing to make it even worse throughout their term's.
The Greek economy is one of the few in the EU to see a GDP contraction in the third quarter, which was strange considering the fact that it had been doing a lot better than the rest of the EU in previous quarters.
Papandreou's government, which is only a couple of months old, got in on the promise of a 2 billion Euro stimulus plan for the economy, which the previous government had avoided so as not to worsen the budget deficit further still. Undoubtedly the previous government was hoping to piggy back out of recession on the back of countries that had stimulate their economies and financial sectors.
But, que sera sera, the stimulus is going ahead under the new socialist government. No details have been made available as to where this "emergency loan" fits in with that stimulus.
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