The European leaders and members of a leading global fund have reached an agreement on a new package for debt-burdened Greece in hopes of avoiding a Greek default, although the deal would include a harsh new wave of austerity measures, according to Financial Times. On Thursday, Olli Rhen, the European Union economic commissioner, said that that the EU and International Monetary Fund have reached a deal that would allow lenders to give €12 billion to Greece even before an agreement is reach over a new €120 billion bailout. The quick action would delay a default that could have come as early as next month.
The disbursement of the initial funds is expected to be completed before the end of the week, and Rhen said, “By doing so, we will avoid the default scenario and pave the way for an agreement on the bailout.” The two-step solution was touted highly by the official, although Rhen was careful to make clear that even the €12 billion payment would not be approved unless Greek leaders approved a new set of austerity measures that were negotiated with Greek Prime Minister George Papandreou. The completion of the initial aid deal would ensure the stability of Greece through September.