BRUSSELS — A hard-won deal to provide a safety net for Greece provided the debt-ridden country with some welcome relief Friday, with its cost of borrowing on international markets edging down slightly and labor unions at home saying they would hold off on any further strikes — at least for now.
Prime Minister George Papandreou said that while Greece still faced problems, the new plan would give it breathing space to implement his Socialist government’s harsh austerity program, designed to reduce its massive budget deficit and pull Greece out of a financial crisis that has rocked the European Union’s common currency.
Greece’s 12.7 percent deficit for 2009 is four times over the EU limit, pointing to the euro zone’s inability to restrict members’ debt and deficits. Worries of a Greek default also highlighted the lack of a European-only safety net for euro zone countries that can’t pay their bills.
“Europe and Greece come out of this crisis much stronger,” Papandreou said. “We know we’re not yet out of the woods. We are on a track of implementing our (austerity plan), and we’re determined to do so.”
The plan agreed on Thursday by the 16 euro zone countries would provide individual loans from other euro zone countries and funding from the International Monetary Fund, in order to rescue Greece if the country finds itself unable to borrow or pay its debts.
