20 Jun 2011

Ministers postpone bailout for Greece

8:48 pm on 20 June 2011

Finance ministers from the Eurozone countries have postponed a final decision on a €12 billion loan to Greece until it introduces further austerity measures.

The loan is the latest tranche of a deal brokered by the European Union and International Monetary Fund deal worth €110 billion.

The ministers say they expect to pay the aid package by the middle of next month, as long as Greece passes €28 billion of new spending cuts and economic reforms.

Greece needs the money to avoid defaulting on its debts due for repayment over the next few months, but the loan is dependent on the implementation of painful domestic reforms.

Belgian Finance Minister Didier Reynders says the release of the latest loan would depend on Greek Prime Minister George Papandreou surviving a confidence vote on Tuesday.

Mr Papandreou's plans for tax increases, pension cuts and privatisations that will save €28 billion over the next four years have sparked nationwide strikes and riots on the streets of Athens.

He has urged parliament to push through painful economic reforms, saying a debt default would be catastrophic.