European leaders agree new Greek bailout plan

Negotiators for the European Union (EU) and the International Monetary Fund (IMF) have agreed a plan with the Greek government for spending cuts and tax rises of 28 billion euros as Athens formally requested financial aid during a two-day summit Brussels. 

Reuters/Yves Herman

Greece has to pass fresh austerity measures next week before the country can access vital bailout funds needed to prevent the country defaulting on it debts in July.

Speaking after the meeting, 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”.

The vote in parliament on fresh austerity measures is due to take place on 28 June. Greek Prime Minister George Papandreou has a slim. five-seat majority in the assembly.

On Thursday, Greek unions announced a general strike starting on Tuesday timed to coincide with the vote.

Following the agreement by the EU and the IMF, the euro eased against the dollar on Friday. In Tokyo morning trade it fell slightly to 1.4242 from 1.4257 in New York late Thursday.

The health of the US economy is also colouring market sentiment after the US Federal Reserve gave no indication this week as to whether it was considering any further easing measures after a second round of asset purchasing or quantitative easing, ends.