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Greece reaches agreement with IMF, EU on rescue package

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Greek Prime Minister George Papandreou said on Sunday that Greece has reached a rescue package with the EU and IMF to avoid "bankruptcy."

"We did and we will continue to do whatever necessary to avert the bankruptcy. It is our historical duty and all Greek citizens understand it," Papandreou told a special cabinet meeting broadcast by Greek national television.

"By the end of my term in office Greece will not be in bankruptcy. We don't care for political cost, but the interests of our country," he added. "We need solidarity among us in the following tough years."

Promising to protect the low-income people, Papandreou said additional austerity measures, under the 120-billion-euro (160-billion-U.S. dollar) deal over three years, will not affect private sector employees.

According to Greek media, the 13th and 14th salaries and pensions of civil servants that are given as Christmas, Easter and summer holiday bonuses, will be slashed and no new job positions will be created in public sector agencies over the next two years.

Finance Minister George Papaconstantinou is expected to announce the terms of the deal on Sunday noon, including new hikes in the VAT tax that will be raised to 23 percent from 21 percent and further increases on taxes for tobacco and alcohol.

Papaconstantinou will travel to Brussels for an urgent eurozone meeting Sunday afternoon.

During his address at the cabinet meeting, Papandreou called on the Greek parliament Speaker Philippos Petsalnikos and members of the parliament to cut their 13th and 14th salaries first.

Referring to the creation of the EU-IMF safety net, the Greek PM stressed that his government's first target was to restore the country's credibility to receive the funds, which could not got from markets any longer.

"We won this battle. We persuaded our partners that the crisis is not only Greek, but concerns the international financial system and the euro," he said.

"Due to different opinions beyond our borders, markets kept the pressure on Greece. Now the fire puts in danger more countries," Papandreou added, vowing that his government was determined to do whatever necessary to avert the worse.

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