Euro zone offers Greece €30 billion in emergency loans

Finance ministers of the 16 euro zone countries yesterday agreed to bail out debt-ridden Greece by offering to provide €30 billion in emergency loans in what would be the first bailout of a member country in its history

Greece, which has total debt of nearly €300 billion and has to pay €11.5 billion end May, will be offered a 3-year €30 billion loan at 5 per cent interest - much lower than the market rate of 7.5 per cent that market lenders were offering last week, but still higher than what Greece was expecting.

In addition to this loan, the International Monetary Fund (IMF) will give Athens between €10 billion and €15 billion in additional funding, which may come at a lower interest rate than the one offered by the euro zone.

"The Euro group is confident that the determined efforts of the Greek authorities and of its European partners will allow it to overcome the fiscal and structural challenges of the Greek economy," said a statement issued by euro zone finance ministers.

Greece, although welcoming the offer, said that it would not take the euro zone loans but would continue with its recovery agreed that include austerity measures and commercial borrowings, which was endorsed early this month by the European Commission.

The European Union was worried that a Greek default would lead to problems in the global market, which would undermine the euro and cause other economically struggling European nations like Spain, Portugal and Italy to enter into a financial mess. (See: After Greece, Fitch downgrades Portugal's credit rating to AA-)