Greece says second bailout 'great relief'

July 22, 2011 - 5:14 AM

ATHENS, Greece (AP) — Greece's finance minister expressed "great relief" Friday in the wake of a second European bailout for the country's crisis-hit economy, and markets reacted positively to the news.

But Evangelos Venizelos also promised to press ahead with unpopular cost-cutting measures aimed at generating a primary budget surplus, starting next year.

Eurozone countries and the International Monetary Fund pledged Thursday to give Greece a euro109 billion ($155 billion) worth of rescue funds, on top of the euro110 billion granted a year ago.

The new eurozone loans will carry a generous 3.5 percent interest rate and with maturities of between 15 and 30 years.

Greek shares are posting gains, with the benchmark index up 3 percent, at 1,250.18. Exorbitant borrowing rates — which have kept Greece locked out of bond markets — eased by more than 100 basis points to 16.5 percent for 10-year bonds.

"(The decision) provides a great relief for the Greek economy, which will gradually be passed on to the real economy," Venizelos told a news conference in Athens.

"But this must in no way means we will relax of our efforts. We must continue implementing our program and remain committed to the great target of meeting budgetary goals."

Greece got the rescue deal three weeks after passing a new, five-year austerity program worth euro28 billion ($40 billion) in budget savings and euro50 billion ($71 billion) in privatization — facing down violent protests, strikes and a sharp drop in popularity for the governing Socialist party.

"Yesterday's decision set a bottom of the barrel for the Greek public debt," Venizelos said. "Now we have a new momentum."