Greece: Government agrees austerity plan in exchange for

24th June 2011

The Financial Times(paywall) reports that the European Union and International Monetary Fundhave demanded Greece close a €5.5bn "black hole" before agreeing to a €12bn aid payment.

George Papandreou, Greek prime minister, has struggled to gain support for the plan, but without it by mid July Athens would have defaulted on its sovereign debt.

This week the EU, IMF and European Central Bank – identified a financing gap of €5.5bn in the four-year programme of fiscal and structural reforms, according to a Greek official.

The Guardian reports that Britain was to be spared from taking part in the rescue after leaders accepted Prime Minster David Cameron's argument that the cost of the bailout should be borne by countries using the single currency.

The Brussels summit of the EU's heads of government had been scheduled to discuss Middle East upheaval and European immigration but ended upbeing  overshadowed by the sovereign debt crisis in Greece.

The BBC News website reported that stock markets across Europe rose upon news of the agreement.

Leading shares in the UK, Germany and France were all strongly higher.

London's 100 index was up 1.2%, Paris's Cac by 1.3% and Germany's Dax by 1%.

More about the Greek debt crisis on Mindful Money

Greece: Government gets austerity mandate

Opinion: Shaun Richards give the latest take on events on his Mindful Money blog.

News: Greece: Markets bet on debt default

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