19 May 2010

Greece receives first tranche of bail-out

9:25 pm on 19 May 2010

Greece has received the first tranche of a loan worth 110 billion euro ($187 billion) to help it overcome its debt crisis.

The European Commission said 20 billion euros from the EU and the International Monetary Fund had been drawn on.

Greece has a euro bond repayment of 8.1 billion due on Wednesday.

Under the bail-out package agreed on 2 May, the 20 billion euro loan is made up of 14.5 billion from eurozone members and 5.5 billion from the IMF.

In return for the funds, the government in Athens is trying to make major austerity cuts - a move that has led to violent clashes in the capital.

On Monday, eurozone finance ministers insisted the euro was still credible despite its slide against the dollar.

The BBC reports the euro fell to its lowest level against the dollar since 2006, amid concerns that debt problems will undermine Europe's recovery. On Tuesday it recovered some ground but remained under pressure.

Greek crisis could spread - professor

An economist who predicted the financial crisis two years before it happened says the Greek debt crisis could spread to developed economies, including Japan and the United States.

Professor Nouriel Roubini of the London School of Economics says Greece's debt crisis is just the tip of the sovereign debt iceberg, as many developed countries face huge deficits.

The break-up of the single currency is also a possibility, he says.