Euro partners, IMF agree to bail out Greece

BRUSSELS - European governments and the International Monetary Fund committed Sunday to pull Greece back from the brink of default, agreeing on about $145 billion in emergency loans on the condition Athens make painful budget cuts and tax increases.

The rescue is aimed at keeping Greece from defaulting on its debts and preventing its financial crisis from infecting other indebted countries just as Europe is struggling out of recession.

After chiding Athens for years of mismanagement and cheating on budget reporting, the IMF and Greece's 15 partners that share the euro currency rewarded Prime Minister George Papandreou for tough measures including cuts in civil servants' pay.

"I have done and will do everything so the country does not go bankrupt," Papandreou told a nation which now faces years of painful belt-tightening after years of overspending.

Even Germany, long the fiercest critic of Greece's boundless spending, saw the need to back a euro-partner in such dire need, if only to keep the shared currency out of more trouble. The crisis is already threatening other eurozone countries with huge financial problems, including Portugal and Spain.

"It is not an easy decision but there is no alternative," German Finance Minister Wolfgang Schaeuble said after the eurozone finance ministers approved the package.

The plan will still need approval by some countries' parliaments. But the eurogroup head, Luxembourg's Jean-Claude Juncker, said Greece will get the first funds by May 19, when Athens has about $11 billion worth of a 10-year bond maturing.

The new Greek measures include cuts in civil servants' salaries and pensions, and tax increases, including for tobacco and alcohol, that aim to cut the deficit to below 3 percent of gross domestic product by 2014 from 13.6 percent now.

Violent protests already marked the Labor Day parades in Athens on Saturday and more demonstrations and a nationwide general strike is set for Wednesday.

"You can't always make the workers pay for the results of failed policies," said Stathis Anestis, spokesman for Greece's largest umbrella union, GSEE.