Greek Finance Minister George Papaconstantinou said today (23 April) the move became necessary after ratings agencies downgraded Greece in the wake of new figures showing a deeper-than-expected deficit.
"In accordance with the statement of the heads of state and government of 25 March 2010 to provide financial support to Greece, when needed, and the follow-up statement of the Eurogroup, Greece is hereby requesting the activation of the support mechanism," wrote Papaconstantinou in a letter, seen by EurActiv, to European Central Bank President Jean-Claude Trichet, Eurogroup President Jean-Claude Juncker and Economic Affairs Commissioner Olli Rehn.
EU officials said it could take a week to process the request for emergency loans but that the rescue would be finalised shortly.
Prime Minister George Papandreou made the request after a months-long selloff by investors pushed borrowing costs to record levels and undermined Athens' efforts to cut its €300 billion debt pile.
"This is the moment. The time that was not granted to us by the markets will be given to us by the support of the euro zone," Papandreou said in a statement broadcast live from the remote, tiny Aegean island of Kastellorizo.
"It is a national and imperative need to officially ask our partners in the EU for the activation of the support mechanism we jointly created," he said.
European markets rallied briefly on the announcement but investors said the long-awaited bailout, which could be the largest multilateral rescue of a country ever attempted, would only provide a short-term solution to Greece's debt crisis.
The request followed growing doubt from investors that Greece could avoid default and market exasperation at Papandreou's socialist government which, torn between punishing market forces abroad and Greek workers protesting at painful austerity measures, was hesitant to ask for help.
The last straw came on Thursday, when European Commission data showed Greece's 2009 public deficit was even higher than feared at 13.6% of gross domestic product, complicating Athens efforts to slash that figure by almost a third this year. That drove Greek bond yields to 12-year highs, making the cost of borrowing prohibitive.
Athens continued talks with the European Commission, the European Central Bank and the International Monetary Fund on Friday on a three-year programme that includes the aid package. But time is pressing, with an €8.5 billion bond due to mature on 19 May.
Finance Minister George Papaconstantinou is due to travel to Washington for the IMF's annual meeting on Saturday. Greek media said he could ask for IMF board to vote on a deal then, but the Fund has said consultation could take two or three weeks.
(EurActiv with Reuters.)
