Greece on Wednesday drew 5.5 billion euros (6.9 billion dollars) from an emergency International Monetary Fund loan, becoming the first eurozone country to be forced to resort to the IMF for aid.
“Greece has accessed the sum without any problems, everything was done in close cooperation with the IMF…. Everything is under control,” a top official from the finance ministry told AFP, speaking on condition of anonymity.
Faced with spiralling debts and a hammering on financial markets, Greece earlier this month was given the go-ahead to access a 110-billion-euro loan from the European Union and the IMF in return for harsh austerity measures.
The move sparked a collapse in confidence in weaker eurozone economies among global investors and forced EU leaders to agree to make a bailout fund of nearly one trillion dollars available for crisis-hit countries.
Greece desperately needs the money as it has been effectively blocked from international debt markets by the forbiddingly high rates demanded by investors and it needs nine billion euros to meet debt repayments due next Wednesday.
A finance ministry official said the government is expecting another loan tranche of 14.5 billion euros from the European Union early next week.
The reforms have sparked a wave of protests that has swept the country in recent weeks. Some of the protests have turned violent and three people died in a bank in Athens that was firebombed by militants last week.
Greece’s two main trade unions held a rally in Athens on Wednesday that was attended by more than 1,000 people and the unions also called for a national strike on May 20, which will be the fourth such stoppage since February.
“Out with the EU and the IMF!” and “Uprising! Everyone in the Streets!” read some placards held up by protesters at Wednesday’s rally. One read: “Down with the Market Junta!” — a reference to Greece’s former military dictatorship.
“The IMF will not stop asking sacrifices from people of labour. Its recipes are catastrophic. The government should categorically reject them,” Yiannis Panagopoulos, chairman of the GSEE private sector union, said in a statement.
He called the government’s proposed pension reform “socially unjust,” adding: “This bill enforces harsh austerity on pensioners and future pensioners, transferring a major load on the new generation.”
The economy meanwhile paused its downward slide with a contraction of 0.8 percent in the first quarter — the same level as in the last quarter of 2009, according to a preliminary estimate issued by the state statistics agency.
“The figures were quite good. They were better than expected,” said Constantinos Vergos, an analyst at Cyclos Securities in Athens, explaining this was partly due to reforms to curb Greece’s rampant underground market.
The contraction also eased slightly on a 12-month comparison to minus 2.3 percent from a downwardly revised minus 2.6 percent last quarter.
But worse results are expected, with the government forecasting that the economy will shrink by 4.0 percent over the year as a whole.
The recession had accelerated last year, with quarterly contractions of 1.0 percent in the first quarter, 0.3 percent in the second quarter, 0.5 percent in the third quarter and 0.8 percent in the fourth quarter.
Some economists have warned the austerity measures will plunge Greece into an even worse recession and stifle growth but many say the reforms being enacted — like the overhaul of the pension system — are long overdue.
A pension reform unveiled this week would reduce average retirement payments by seven percent by 2030 and cut the highest pensions by up to 14 percent.
The reform would also raise the average effective retirement age to 63.5 from 61.4, curbing Greece’s widespread early retirement schemes.
Labour Minister Andreas Loverdos has warned that the pension system faces “collapse” in 2015 without reform.
A parliament vote on the pension reform expected later this month could be tough as the government holds a slim majority.
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