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Greece aiming for second bailout

Greece has unveiled a new austerity programme and its finance minister has said it hopes to secure a second bailout deal this month.

He indicated that European Union countries may back calls to get the private sector involved.

George Papaconstantinou defended the new austerity package to be voted on in Parliament, saying it was essential to keep Greece solvent.

The measures, unveiled on Friday and worth 28 billion euro (£ 24 billion), will impose a host of new taxes on austerity-weary Greeks - in spite of previous pledges to avoid more blanket tax hikes - and cut public sector staff by a further 20%. Other key details of the plan will be announced in late June.

"We have a choice between a difficult path and a path of destruction," said Mr Papaconstantinou. "We must fix what's wrong or this country has no future."

With yields on its 10-year bonds at near 17 %, Greece is highly unlikely to return to markets next year - as its original bailout deal had intended - and is negotiating an additional rescue deal to avoid potential default so it can meet its debt obligations for the years to 2014.

That assistance would be in addition to the 110 billion euro (£96 billion) in rescue loans the country is already receiving from other members of the eurozone and the International Monetary Fund. It is to receive the next instalment, worth 12 billion euro (£10 billion), next month - but the IMF requires financing guarantees for the next 12 months to continue its payouts.

European countries have been discussing how to resolve the problem with Greece's funding gap, possibly with a second bailout. Eurozone finance ministers meeting in Brussels on June 20 and EU leaders gathering on June 23-24 are to discuss the issue.

One new element in a second bailout could well be the involvement of the private sector. There are suggestions, particularly from Germany, that Greece's private creditors agree to swap their current bonds with those with a longer maturity - the hope being that it will give Greece more time to get a grip on its public finances.

The new austerity measures slash spending and hike taxes between now and the end of 2015 - two years beyond the current government's mandate. They also include a 50 billion euro (£44 billion) privatisation drive for the same period. Measures include a one-off luxury tax on swimming pools and yachts and repatriating money taken out of the country.


From Belfast Telegraph