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March 25, 2010    

EU summit agrees bailout for Greece

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by Kay Murchie
EU summit agrees bailout for Greece

The two-day EU summit, which commenced in Brussels today, saw a deal reached to help Greece through its debt crisis.

According to Brussels, the package (which has yet to be approved by other euro zone nations) will total €23 billion (£21 billion) and will include help from the International Monetary Fund (IMF).

The two-day summit of the 27 EU member states was set to be a routine meeting to discuss long-term plans for recovery but the debt-crisis in Greece saw an extra item added to the agenda.

Greece currently has the highest debt of the 16-member euro zone, at €300 billion (£273 billion) and its economy is considered to be the euro zone’s weakest.

The country is currently taking action to reduce its public deficit from 12% to 8% of GDP this year.

So far the euro zone has avoided seeking an IMF loan for Greece, opting for a solution closer to home to maintain global confidence in the euro.

However, arriving at the summit today, Greek Prime Minister George Papandreou urged EU leaders to act to stabilise the euro.

The ongoing uncertainty in Greece pushed the euro to a 10-month low yesterday against the dollar - falling to its lowest level since May last year.

However, as well as the debt crisis in Greece, there are fears for Portugal after international credit rating agency, Fitch, cut the country’s credit rating to ‘AA-’ with a negative outlook.

According to Fitch, Portugal’s prospects for recovery are weaker than its fellow nations in the euro zone, which could put pressure on public finances.

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