Tens of thousands of Greeks participated in nation-wide May Day protests Saturday against austerity measures meant to tackle Greece’s severe budget and the debt crisis that is currently threatening the stability of the entire eurozone.
Riot police used tear gas in Athens to keep angry demonstrators back from the Greek finance ministry, where officials were in the last stages of talks with officials from the European Commission and International Monetary Fund (IMF) on the pre-conditions for the release of emergency loans.
The EU-IMF loan aid package is expected to be worth €120 billion for three years until 2012.
The Greek government said it would announce its latest round of budget cuts on Sunday (2 May) just ahead of an emergency meeting of eurozone finance ministers in Brussels, to be chaired by Jean-Claude Juncker, the prime minister of Luxembourg.
The ministers are expected to activate the financial assistance package for Greece.
If so, EU officials say Greece would have access to the first tranche of funds from the IMF on Monday morning. This would help Athens refinance €8.5bn of bonds that mature on 19 May. The loans will enable the Greek government not to seek funds from the financial markets, which are currently demanding sky-high interest rates.
Yields on Greek government debt yesterday soared to around 23%, reflecting investors’ fears that the country could default on its debt.
The latest austerity measures set to be announced by Prime Minister George Papandreou are likely to include wage cuts for public-sector workers and another hike in value-added tax.
The measures are supposed to cut spending by around €24bn and to cut at least 10 percentage points from Greece’s budget deficit over the next three years. Greece’s budget deficit stood at 13.6% of gross domestic product last year.
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