Greece takes first step towards its multi-billion-pound bailout
'Let's talk': Greek finance minister George Papaconstantinou has opened the door to an EU bail-out
Greece has taken a tentative step towards accepting a multi-billion-pound bailout after it asked for official rescue talks with the International Monetary Fund and European authorities.
In a letter to Brussels officials, finance minister George Papaconstantinou said that he was ready to discuss a ' multiyear programme of economic policies' which would see Greece agree to a raft of austerity measures in exchange for a £26billion loan.
The money would be provided by eurozone countries and the European Central Bank, with the IMF providing a standby top-up loan of £13billion.
A rescue package could be tied up as soon as next week, with IMF officials due to start a 15-day long tour of the Mediterranean country on Monday.
However, IMF officials stressed that Greece - which is struggling to finance a national debt greater than its annual
economic output - had still not decided whether to apply to activate an emergency aid mechanism announced by euro zone governments last Sunday.
Despite suggestions that a bailout could be imminent, Greek bond yields surged as the markets lamented a lack of detail, and the difficulties some EU nations could encounter signing off such a deal
The spread between Greek bonds and the benchmark German bund - a measure of the premium investors require to buy Greek debt over German - widened to 4.36 percentage points from 4.06.
The yield reached its highest level since last week, before eurozone countries had agreed to provide a bailout.
Dominique Strauss-Kahn, managing director of the IMF, said: 'Following a request by the Greek authorities, I have agreed to send an IMF team to Athens to begin discussions with the Greek authorities on policies that could provide the basis for Fund financial assistance, under a multi-year programme, in the case that the authorities decide to ask for assistance.'
A senior IMF official, speaking last night on condition of anonymity, said Greece had expressed interest during preliminary talks in a three-year precautionary standby agreement, which it would tap only when needed.
The official said European financing, part of a joint aid package, would have to be assured to trigger IMF funding. The Europeans had made it clear that IMF funding should not exceed one-third of any total Greece package although details of financing had not yet been discussed.
The joint IMF and EU mission should last about 15 days and any agreement would be finalised shortly afterward by the IMF board, the official noted.
Ben May, an economist at Capital Economics in London, said: 'The fact they are asking for clarification on various issues suggests they are seriously considering activating the package.'
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