Greece: New measures before it receives any financial aid

The debt-saddled euro-zone member has already announced billions of euros in austerity measures, including tax hikes and public sector wage cuts, but is talking with the EU and IMF about additional steps.

"The fact that neither the EU nor the German government have taken a decision [on providing aid] means that the response can be positive as well as negative," Schaeuble told the Sunday edition of Bild newspaper.

"This depends entirely on whether Greece continues in the coming years with the strict savings course it has launched. I have made this clear to the Greek finance minister."

Later on Saturday, German Foreign Minister Guido Westerwelle echoed Schaeuble's call, urging Greece to come up with a budget consolidation plan that will persuade countries to pitch in.

"It has yet to be agreed that Greece will actually get assistance in Europe at all. We will not write a blank checque," he said in an interview on ZDF television.

Greece formally applies for help

Greece bowed to pressure from financial markets on Friday (23 April), making a formal request for the activation of a joint aid package from the EU and International Monetary Fund (IMF) that is valued at up to 45 billion euros.

Opposition to aid for Greece runs deep in Germany. Chancellor Angela Merkel, who faces a crucial regional election on 9 May, has been at pains to stress that aid will only flow if Athens takes further steps to cut a budget deficit which soared to 13.6% of gross domestic product (GDP) last year.

Schaeuble said a "tough restructuring programme" for the coming years was "unavoidable and an absolute prerequisite" if Germany and the EU were to approve the aid Greece had requested.

But he also made clear that Germany had to be ready to support Greece to ensure the stability of the single currency.
"We are defending the stability of the euro, because Germany benefits [from the currency] at least as much as all the others. Help for Greece is therefore not a waste of taxpayers' money, but a move based on fundamental German interests."

Greece expects debt aid rescue on time

On Sunday (25 April), Greek Finance Minister George Papaconstantinou responded by saying Greece was already taking tough measures and the rescue would include strict conditions.

He said bailout talks with the International Monetary Fund and European partners went well and he was confident Greece would secure help in time to meet a 19 May deadline.

French Economy Minister Christine Lagarde promised to hold Greece accountable for "unsuitable economic policies" that pushed its 2009 budget deficit to 13.6% of gross domestic product and its debt to 115% of output.

She described the aid package as a "cocktail of indulgence and great strictness," telling the Journal du Dimanche weekly that Greece's partners would closely monitor progress and put their "foot on the brake" if Athens reneged on commitments.

Germany and France, the biggest economies in the 16-nation euro zone, are due to provide about half of the EU aid.

Fears over the chances of a debt default have pushed the yield on Greek 10-year bonds above 8.7%, a whopping 567 basis points over the rates on benchmark German Bunds.

This has made it prohibitively expensive for Athens to service its mountain of debt and Greece's formal request for aid on Friday did little to ease market pressures.