Gloom in Greece despite EU loan relief

ATHENS: Relief in Greece over an imminent EU-IMF loan rescue failed to dispel gloom on Saturday over giant budget cuts which observers say could plunge the recession-hit country into an uncertain future.

News that the eurozone would soon unblock billions of euros for urgent Greek debt payments made little impact amid lingering shock from this week's deadly riots and fear of the coming austerity storm.

"There are a lot of hidden sides (to the crisis) which we still ignore. But they all mathematically point to disaster, to unbelievable recession, the worst our economy has seen," pro-opposition daily Eleftheros Typos said Saturday.

"There is enormous danger for the country and the nation's cohesion," the conservative daily warned.

"The country is desperately asking for development measures to be implemented immediately to get production going and reduce unemployment, which mainly strikes the young," added left-wing Eleftherotypia.



With the country in urgent need of nine billion euros ($11 billion) by May 19 to service existing debt, Greek PM George Papandreou reported with relief early on Saturday that rescue funds would arrive within days.

"In the following days, Greece will receive the first tranche of the 110 billion euros from the EU and the IMF," Papandreou said after an emergency late-night summit of euro leaders in Brussels.

"This will allow us to implement our (austerity) programme and our reforms," he underlined.

Greece's total debt stands at nearly 300 billion euros and there is growing concern that the government will face severe difficulty in implementing the harsh cuts in a worsening recession and with strong union opposition.

The parliament in Athens has become a focal point for successive street protests. On Wednesday, violence erupted on the sidelines of a massive demonstration and three bank employees died when their branch was firebombed.

Clashes between young protesters and police also broke out Thursday as the chamber approved the austerity plan committing to knocking 30 billion euros off the public deficit to bring the economy within EU guidelines.

Fears in past months that Greece would be unable to maintain debt payments sent its borrowing costs soaring, sapped the euro and put the spotlight on other weak European economies.

Spain and Portugal, struggling to fend off suggestions they could follow Greece's footsteps, have blamed speculators for steep falls in their stock markets and Madrid warned it could take legal action against them.

Ireland and Italy have also come under pressure from market attacks.

European stock markets suffered on Friday, with London, Frankfurt and Paris plunging by more than four percent shortly before closing at the end of a week in which the euro dropped to 14-month lows at around $1.25.

Finance ministers from the 27 European Union states are to hold talks Sunday to flesh out a broader crisis fund to firefight problems elsewhere in the bloc.