Euro zone grants multi-billion euro lifeline for Greece

Mon Jul 8, 2013 4:27pm EDT
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By Annika Breidthardt and Martin Santa

BRUSSELS (Reuters) - Greece secured a lifeline from the euro zone and the IMF on Monday but was told it must keep its promises on cutting public sector jobs and selling state assets to get all the cash.

The 6.8 billion euro ($8.7 billion) deal, which spares Greece defaulting on debt in August, will see Athens drip fed support under close watch from the euro zone and the International Monetary Fund to ensure implementation of unpopular reforms.

The tough approach underlines waning patience with Greece, which has been kept afloat on emergency funding since May 2010 but has failed to make all the difficult reforms demanded of it after a decade of living beyond its means.

"It's time to step up the momentum of reform in Greece," Olli Rehn, the European commissioner in charge of economic affairs, told a news conference.

Reforming Greece remains central to the euro zone's ability to put its crisis behind it, while the bloc needs Athens to cooperate to keep the IMF from pulling out of the program.

But it is only one of the problems facing the euro zone.

Political upheaval in Portugal last week raised questions over Lisbon's ability to complete reforms needed to return to borrowing on the markets. [ID:nL5N0FB37W] Rehn also cautioned that the "clock was ticking" on Slovenia, where banks are saddled with billions of euros of bad loans.

Keeping Greece in a hand-to-mouth existence, meanwhile, could threaten its bid to emerge from economic depression, with nearly two out of three young Greeks without work.   Continued...

European Economic and Monetary Affairs Commissioner Olli Rehn listens to Italy's Economy Minister Fabrizio Saccomanni (R) during an euro zone finance ministers meeting in Brussels July 8, 2013. REUTERS/Francois Lenoir