The Europe-IMF bailout package for Greece will allow Athens to avoid borrowing on the markets for 18 months, IMF chief Dominique Strauss-Kahn told Le Monde daily on Monday.
“I convinced the Europeans that this massive effort was needed so that Greece would not have to turn to the markets for 18 months,” said the managing director of the International Monetary Fund.
European finance ministers on Sunday launched a 110-billion-euro bailout to save Greece’s economy and shore up the euro amid fears of a chain reaction from the debt crisis across the single-currency zone.
After Standard and Poor’s downgraded Greek debt to junk status last week, Greek 10-year bond yields shot to a record over 11 percent over concerns the country might default.
The IMF will put up 30 billion euros in the rescue package that Strauss-Kahn said would pull Greece back from the brink of bankruptcy and avoid a situation in which “public servants and pensioners would not get paid next month.”
In exchange for the loans, the Greek government agreed to cut 30 billion euros from its budget over three years, to cut its public deficit from nearly 14 percent of output last year to less than three percent by 2014.
