Greek Prime Minister George Papandreou said Greece must now make good on the gesture of faith that the EU showed the country on Thursday as he spoke during a Cabinet meeting in Athens yesterday.
He also called an EU decision to support Greece in its efforts to cut the EU’s largest deficit “significant” and said “the battle isn’t over.”
However, Greece’s recession deepened in the fourth quarter of last year when the economy shrank by 0.8 percent compared with a 0.3 percent contraction in the third quarter, official estimates showed yesterday.
French Finance Minister Christine Lagarde said the “moment of truth” for Greece will come next month and that the EU and IMF will be watching closely to make sure Greece fulfills its promises to pay off debts.
Asked whether European finance ministers would firm up details of possible aid to Greece at a meeting on Monday, Lagarde said in an interview on French radio RMC: “We will discuss it without doubt.”
EU leaders at a summit in Brussels on Thursday offered political support to Greece and said they could come to its aid if necessary, but gave no details of an eventual financial bailout. Markets have been shaken by fears that Greece could default and the debt woes could spread to other vulnerable economies.
Greece will report back to EU nations next month on progress on its debt-fighting measures, and based on that progress, the EU and the European Central Bank could order tougher action that Greece may find difficult to implement. The EU is seeking help from IMF experts to make that assessment.