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EuroZone Update: Greece Seeks More Bailout Funds, Threatens to Depart Economic Block

By on January 5, 2012

Prime minister of Greece, Lucas Papademos has requested an additional financing line from the European Central Bank and International Monetary Fund to the tune of € 130 billion.

The embattled sovereign has an obligation to its creditors to redeem € 14 billion worth of bonds by March 20.

The country has sent a clear signal to other member countries of the Euro Zone that it may be forced to “opt out of the markets” and “out of the Euro” unless the second bail out package is endorsed by the EU.

According to Papademos, “Without this agreement with the troika (EU, IMF and ECB)and subsequent financing, Greece in March faces the immediate risk of a disorderly default.”

Calls for deeper wage cuts are being made, despite several months of austerity measures and increase in tax rates that have angered many Grecians.

Private sector jobs are now the focus of further economic belt-tightening as the government has called on the largest private union in the country to negotiate with employers on wage cuts.

Private sector labour union the GSEE has rejected outright pay cuts but has said it will discuss with employers on ways to lower other cuts.

In the interim, the troika is hesitant to deal with Greece concerning new bail out money until the country has been adjudicated to have adopted sweeping reforms to its economic system, which Greece fears will hamper competitiveness.

Greece continues to threaten that it would be forced to default and leave the Eurozone, however analysts generally expect an amicable resolution of these issues before a large scale default is allowed to occur.