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Portugal gives cash to Greeks

By CHRIS GRAEME [email protected]

Portugal’s share of a 45 billion euro EU/International Monetary Fund bailout plan for Greece has been set at 774 million euros.

After various weeks of hesitation, the EU member states have finally clarified the details of a mechanism designed to prevent Greece from going bankrupt.

The devil in the detail was hammered out over the weekend at an emergency videoconference meeting of EU finance ministers who agreed to stump up 30 billion euros for the next 12 months while a further 15 billion euros has been agreed by the IMF.

The lifeline comes in the form of a credit loan, which will enable Athens to refloat its high level of public debt at more accessible prices.

The agreement comes in the nick of time as it was revealed over the weekend that Greece’s debt, which had been put at around 12 per cent of its GDP, was in fact running at over 14 per cent.

The news had sent the value of Greek Treasury Bonds plummeting with investors demanding a more than seven per cent return to cover their risky investments.

“Euro zone member states will make funds available to Greece, if it needs them, through a series of bilateral loans,” said the Prime Minister of Luxemburg, Jean-Claude Juncker, who is also president of Eurogroup, a pan-European financial consulting alliance.

“EU member state contributions are worked out according to the percentage of capital they hold in the European Central Bank,” he added.

It means that Portugal, which takes on 2.48 per cent of the ECB capital, could be called upon to fork out 774 million Euros in the name of Euroland stability.

Reluctant

It had been a position which Portugal had originally shown itself reluctant to participate in when the outline of the Greek rescue package was published on March 15 and 16.

At that time the Portuguese Minister of Finance, Fernando Teixeira dos Santos, had said that Portugal was in a “delicate situation”, which made it “difficult to support an increase in its public debt to help Greece.”

On Sunday, he changed his position by stating that the bailout mechanism “guaranteed the financial stability of the Euro area which was a fundamental condition for the economic and financial stability of each member state and required solidarity from among the same.”

In practice, the plan means that each Portuguese citizen or person working and paid in Portugal will have to fork out 77 euros to save Greece.

World-famous Hedge Fund expert George Soros issued a warning hours before the plan was finally approved by saying that the Greek crisis had pushed the EU perilously close to monetary “disintegration”.