EU agrees to new Greece rescue package

As negotiators for the EU and the IMF struck agreement with the Greek government on spending cuts and tax rises worth €28 billion and plans to bring in tens of billions from the sale of state holdings, Athens formally requested financial aid during yesterday's session of a two-day summit in Brussels.

Greek MPs must pass the new austerity plan before the end of the montht, letting eurozone finance ministers "complete work on outstanding elements to allow the necessary decisions to be taken by early July."

With the bloc under US pressure to avert financial market contagion, Greek Prime Minister George Papandreou said on leaving for the night: "We've got the support of our partners and I think this is not only a green light but also a positive sign for the future of Greece."

EU president Herman Van Rompuy said the new rescue demanded by worried international partners should allow initial "disbursement in time to meet Greece's financing needs in July."

That means a €12-billion tranche of eurozone and IMF loans from last year's €110 billion bailout, which Greece needs to avert default in July and which was blocked pending the vote in the Greek parliament.

The EU leaders called on "all political parties in Greece to support the programme's main objectives," saying "national unity is a prerequisite for success."

Papandreou has a slim, five-seat majority in the Greek assembly and on Thursday Greek unions announced a general strike, starting Tuesday, timed to coincide with the vote.

Maltese Prime Minister Lawrence Gonzi who spoke to the media in Brussels, stressed on the support of Malta for a second aid package to Greece.

"It is in Malta's interest to ensure that Greece does not default," Gonzi said, adding that Malta is effected by problems in other European countries and it is in Malta's interest to contribute to help keep Greece afloat.

Last year, Malta had made made available some €78 million for the first bailout to Greece.

Finance ministers from the 17-nation eurozone meet again last Sunday, ahead of a deadline for Greece to repay maturing debt or face default.

Greek authorities settled their new budgetary plans during negotiations in Athens with the European Commission, the European Central Bank and the International Monetary Fund, with Papandreou vowing "radical changes to make our economy viable."

He added: "This is a fight for the Greek people, this is a fight for Greece, for our country, but it's also a fight for a common European currency and a common Europe."

"There is a very strong determination among the member states to save what we have done since 50 years all together," French Foreign Minister Alain Juppe told the BBC of fears the eurozone might implode should Greece be allowed to default.