European Union and IMF granted a lifeline aid to Greece. However, it was told to keep all of its promises by cutting jobs in the public sector and sell the assets of the state to generate cash. The lifeline was a 6.8 billion euro deal which would be under the constant watch of the IMF and euro zone. The strong stance taken by IMF and euro zone demonstrates the decreasing patience with Greece to keep it afloat.
Olli Rehen, the European commissioner for economic affairs, said that it is the right time to increase the momentum of reforms in Greece. It is important for the European Union to maintain the stability of the euro zone by reforming the Greece’s economy. The situation is also bad in Portugal that rose due to the inability of Lisbon to complete reforms. Many of the banks in Slovenia are saddled with several billion euros in the form of bad loans.
The current lifeline from the euro zone and IMF will help Greece to emerge from economic depression. It is also expected that Greece may return to growth trajectory by the year 2014. In this regard, Greece requires much cash injections into its economy. Greece has to demonstrate its credibility by cutting several jobs in the public sector, to receive the first payment of 2.5 billion euros. The lifeline aid was necessary to Greece as it did not show any recovery signs in the sectors of Investment, Exports and Tourism.
Under the several terms of the Monday’s agreement, it was agreed to offer staggered payments to Greece which starts with an instalment of 2.5 billion euro that comes from different euro zone countries. In the October, a further payment of 500 million will be provided to Greece. IMF offers a close watch on the recovery and reform measures of Greece in order to make best use of the lifeline aid.
In Portugal also, it has become difficult to make a new borrowing towards its recovery. For patching up the recent political crisis in Portugal, its Prime Minister gave more say to his coalition partner on the economic policy. It is crucial to have political stability in a country in order to push forward the economic measures.