BBC News | Wednesday, 21 April 2010 | 15:35 GMT
The Greek government’s cost of borrowing has hit a new high as talks on a joint eurozone and International Monetary Fund (IMF) rescue plan begin. The interest rate on 10-year government bonds hit 8.3% – the highest since the euro was introduced. Rates rose as it became clear that talks over the aid package may not be finished until days before a multi-billion-euro loan is due for repayment. Investors are becoming more convinced that Greece will need to be rescued. Greece’s finance ministry said the talks with the European Commission and the IMF would take about two weeks, with a joint text issued on about 15 May. On 19 May, Greece is due to repay investors an 8.5bn euros (£7.3bn) bond.
The talks cover austerity measures that Greece must take during the next three years to reduce its 300bn-euro debt mountain. If all sides can agree the measures, it should help clear the way for a quick payout of up to 40bn euros on offer from eurozone members and the IMF. In a statement on Tuesday, Greece’s finance ministry said: "The discussions concern a three-year programme of economic policies… which can be supported with financial assistance from eurozone members and the International Monetary Fund should Greek authorities decide to request the activation of the mechanism."