European Union and International Monetary Fund officials are wrapping their review on Greece today in order to prepare for a second rescue package which will include stricter austerity measures and quicker privatization.
Senior euro zone officials have agreed in principle to a new three-year programme for Greece to last until mid-2014. This is in addition to the first rescue package provided in 2010 that totalled 110 billion Euro .
However, the previous bailout deal imposed the burden on tax payers, but the new deal will involve some participation of private sector investors, who bought Greek government bonds and will have to share the burden, perhaps in the form of cutting the value of their debt.
Prime Minister Papandreou heads to Luxembourg to meet Eurogroup chairman Jean-Claude Juncker and other Eurozone officials to present his part of the deal and win approval.
“The prime minister will present the main points of the mid-term plan to Juncker, which include speedier privatisations and new measures to cut government spending and raise revenues,” a senior Greek government official said.
Europe’s financial leaders need to hammer out a revised Greek package by the end of June, in time to persuade the IMF to pay out its share of the next tranche of loans and before a summit of EU leaders on June 23-24. The IMF had indicated that it would withhold its share of the June payment unless the EU comes up with a plan to close Greece’s funding gap for 2012.