Greece to get a 110-billion euro bailout package

The finance ministers of 16 nations that use the euro Sunday night sealed a 110-billion euro bailout package for heavily indebted Greece over three years after the country's government agreed to a new round of tough austerity measures.

The largest financial rescue of a nation from bankruptcy will involve credit of 80 billion euro from the 15 other euro zone nations and 30 billion euro from the International Monetary Fund (IMF).

It is intended to prevent Greece from defaulting on its staggering debts of more than 300 billion euro as it could have a domino effect on other debt-ridden nations in the eurozone. Under the financial support programme, which was endorsed by 16 eurozone finance ministers at an emergency meeting in Brussels, a maximum of 30 billion euros from the EU and the IMF will be given in the current year.

The first loan tranche will be made available to Greece before May 19 for repaying its debts, Chairman of the euro zone group and Luxembourg Prime Minister Jean-Claude Junker said after the meeting.

"We are optimistic that our help will be enough to meet all Greek payment obligations till 2012," he told a news conference. The bailout deal will be formally endorsed by the heads of states and governments of the euro zone at a European Union summit on May 7, where they will also discuss measures to avert a similar crisis in future, Junker said.

He said credit from euro zone partners and the IMF will be paid to Greece only if the debt-ridden country sticks to the austerity measures announced on Sunday.

The European Union and the IMF will monitor Greece's progress with its economic recovery programme every three months.

The bailout package came after weeks of wrangling, post the Greek government reached a deal with negotiators from the European Commission, the European Central Bank and the IMF in Athens on a new round of severe spending cuts.

The Greek government will undertake public sector salary and pension cuts for three years, tax increases, scrapping bonuses and other measures, which it hopes could save up to 30 billion euros over three years.

The EU and the IMF have been demanding that Greece takes steps to reduce its budgetary deficit to 3.6 per cent of GDP by 2011 from the present level of 13.6 per cent. German Finance Minister Wolfgang Schaeuble estimated that his country's share to the bailout package will be around 22.4 billion euros.