The German Chancellor, Angela Merkel, defended the measure arguing the need for a firm action by the eurozone
Berlin (dpa) – The German government approved today the expected bill that includes the loan to Greece of 22,400 million euros in the next three years.
The law will be sent for sanction on Friday to the two chambers of Parliament, after which it must be initialed by the federal president, Horst Köhler, to be able to enter immediately into force. The German Chancellor, Angela Merkel, defended the measure arguing the need for a firm action by the eurozone.
“The rescue action is of a huge political and economic dimension.” Merkel stressed that through aid not only helps Greece, but ensures the stability of the euro, something that also benefit the Germans. “A stable European currency is a very high asset,” he said, while demanding more measures.
“We have to learn from this situation” and put an end to speculation, as well as create a European rating agency. The president demanded reforms of the Stability Pact so that it can not be breached in the future and proposed a unified banking tax in Europe to finance future crises.
The countries of the euro zone agreed on Sunday in Brussels to make available to Greece through loans at lower interest than in the market about 80,000 million euros in the next three years. Germany will contribute the largest sum among Europeans, some 22,400 million euros – equivalent to 28 percent of the total, through credits from the KfW public bank and state guarantee.
For its part, the International Monetary Fund will attend Athens with another 30,000 million euros. The money will be released within a week, said the director of the entity, Dominique Strauss-Kahn, in Washington. Athens needs money before May 19, when interest is due for about 9,000 million euros.
In return, Greece committed to implement a plan of cuts that includes the increase in the Value Added Tax from 21 to 23 percent, the elimination of the bonus (extra pay) to public employees and retirees and the increase in the retirement age.
The Athens government plans to save some 30,000 million euros until 2013 and reduce the public deficit to 13.6 percent by 2014 to the limit allowed by the Stability Pact of three percent. Greek unions have called for multiple protests.
For this year, bilateral European loans for 30,000 million euros and the IMF for 15,000 million euros are planned. The coalition of Christian Democrats and Liberals under Merkel can pass the law in Parliament by itself. The opposition parties expressed reservations.
For the Social Democrats, the aid should include an important contribution from the German banks, which have in their balance sheets about 27,000 million euros of sovereign bonds of Greece. Like Los Verdes, the SPD demands a plan to prevent speculative attacks such as the one launched against Greece.
The Left Party announced that it will vote against the law. “We need the participation of the banks, we need to limit the speculations with currencies and we need a regulation of the international financial markets to finally put an end to these harmful speculations that the taxpayer always has to pay”, demanded the head of the Social Democratic bloc, Frank -Walter Steinmeier.
The European Central Bank announced today that it will make an unprecedented exception and accept sovereign bonds of Greece as collateral for loans from the European bank regardless of the rating they receive from the rating agencies.
The Frankfurt-based entity added in a statement that the suspension of all conditions relating to the credit rating for the Greek debt securities will govern “until further notice”.
After last week the single currency rose when Athens gave the green light to the terms to receive emergency credits, today the euro fell to $ 1.3238 the official exchange amid the nervousness of the markets because of the risk that The crisis extends from Greece to other countries that also struggle to balance their public finances.
The fear of investors is that having approved the aid to Greece, Europe and the International Monetary Fund (IMF) have to face similar measures in nations such as Spain, Portugal and even Italy.