Finance ministers from the eurozone today sought to reassure markets that a €45 billion emergency loan facility for Greece they are preparing together with the International Monetary Fund (IMF) will be ready and effective if needed.

Jean-Claude Juncker, the president of the Eurogroup, which brings together the finance ministers of the 16-member eurozone, said that governments’ work on developing the facility was “progressing at a satisfactory rate, as are the discussions with the IMF”.

He said that eurozone finance ministers had evaluated the “technical and legislative preparation” at a meeting today in Madrid.

George Papandreou, Greece’s prime minister, today also gave assurances that the facility would be ready if needed. “We are taking all the preparatory actions required”, he told Greece’s parliament.

Greece is battling to control a cripplingly high budget deficit that reached 12.9% of gross domestic product in 2009. Greece must raise over €11 billion by the end of May in order to meet its obligations to investors and prevent default.

However, over the past three days investors have steadily raised the interest rates demanded by investors on Greek sovereign debt for fear the facility may not be able to save Greece from default.

The markets are concerned, for example, that some governments, notably Germany, will need to hold parliamentary votes before loans can be released. Investors also fear that the IMF and eurozone have not resolved how the facility would work in practice, and would like to know what proportion of the loans would be provided by the IMF, and what conditions would be imposed on Greece in exchange for financial support.

Juncker sought to dampen speculation that Greece is on the verge of applying for emergency loans. “The Greek authorities did not put forward a request [at the meeting in Madrid] and we did not receive any indication the Greek authorities would do so,” he said.  

Papandreou yesterday requested discussions with the IMF, European Commission and European Central Bank (ECB) on the conditions that would be attached to aid, raising speculation that a request for support is imminent. The discussions will begin in Athens on Monday (19 April).

Juncker said that Greece’s letter requesting the opening of discussions “reflected a desire of the Greek government to respect the procedures of the IMF”, which he said, required an invitation to be allowed to develop its part of the loan facility. “Certainly, it was not in any way an application [for support],” he said.

Eurozone finance ministers agreed the €45 loan facility at an emergency teleconference last week in order to reassure markets that Greece would not be default on its obligations.

Eurozone governments agreed to provide up to €30bn to Greece in the first year of support, and left open the amount that could be provided in future years. Officials said that all governments indicated during the teleconference that they would be willing to provide support to Greece this year. The money would be provided as part of a joint programme with the IMF, which is expected to provide around €15bn this year, at significantly lower interest rates than those charged by the eurozone.

The finance ministers agreed that, should Greece seek financial help, they would provide co-ordinated loans at a fixed interest rate. The rate on a three-year fixed-rate loan granted on 5 April would have been around 5%.

Greek ten-year bond yields rose to 7.30% today, up from 7.18% at yesterday’s close, and not far below a record high of 7.50% that they reached last week. The rate is over 420 basis points higher than that charged on German bonds, the benchmark for the eurozone.

Click Here: Cheap FIJI Rugby Jersey