German Chancellor Angela Merkel said today that her government would not offer financial aid to Greece until a credible savings plan had been agreed upon by European and international donors, according to dpa. Greece's Prime Minister George Papandreou on Friday formally requested the activation of a 45-billion-euro (60-billion-dollar) aid package from euro members and the International Monetary Fund (IMF), aimed at pulling the country out of a debt crisis. "It is important that the German government, like every government in the eurozone, guarantees the stability of the currency," Merkel said at a press conference in Berlin. But, Merkel said, "strict conditions" must be laid down for Greece to be given money by European partners. "A credible savings plan must be negotiated between Greece, the European Commission and the IMF," Merkel said. Such a plan entails the need for Greece to specify cost-cutting measures for the years 2011-2012. An IMF mission is currently in Athens. Figures emerged on Thursday which showed that Greece's budget deficit is even higher than thought, now amounting to 13.6 per cent of GDP. Greece must repay some 8.5 billion euros in borrowings by May 19, a move that will be impossible without the approval of financial aid. Germany, Europe's largest economy, has said it would be prepared to participate in the bail-out, through some 8.4 billion euros from KfW, a state bank. But the issue is politically awkward for the government ahead of key state elections in May. A poll conducted by broadcaster ZDF in March found that 68 per cent of the German public were against giving any financial aid to Greece. "Not only is it a problem for Greece, it is a problem for the eurozone," Merkel argued. In addition, any loan to Greece must be approved by the German parliament, a process that could take around 10 days according to the finance ministry. Merkel said that she had spoken with the Greek Prime Minister, who said that negotiations over the savings plan would continue for "a few more days." The plan must then be approved by the European Central Bank, the IMF and the European Commission. "When these two steps are taken, then the form and extent of the aid can be discussed," Merkel said.
