Greek PM calls for EU bailout loans

Prime Minister George Papandreou says Greece is asking for bailout funds from the European Union-IMF financial rescue plan to pull the country out of a debt crisis.

"The moment has come," Papandreou said Friday, adding that pressures from financial markets threatened the country's economy.

Speaking on the island ofKastelorizo, Papandreousaidit was "a national and pressing necessity for us to formally ask our partners for the activation of the support mechanism, which we jointly created in the European Union."

Greek Finance Minister George Papaconstantinou sent a letter to theEuropean Commission,the European Central Bank and the euro group those countries that use the euro currency formally asking for the loan package.

International Monetary Fundmanaging directorDominique Strauss-Kahn vowed quick action on Greece's call.

"We are prepared to move expeditiously on this request," Strauss-Kahn said in a statement issued shortly after Papandreou's announcement.

Strauss-Kahn had plans to meet with Papaconstantinou in Washington on Saturday.

Borrowing costs jump

The financial lifelinewould provide Greecewith the equivalent of about $39.94 billion Cdn inloans from othercountries of the eurozone at interest rates of about five per cent. The package also include about $13.31 billionfrom the IMF.

The bailout must still be reviewed by the EU executive, the European Central Bank, and be approved by the other 15 countries using the euro.

With those approvals pending, Papanconstantinou said it will be several days before the money will be available.

Greece had said it would try to solve its debt crisis via the bond market so it could avoid tapping the EU rescue package.

However, borrowing costs jumped Thursday, pushing the interest rate onGreece 10-year bonds to nearlynine per cent.

AEuropean Union report released Thursday said Greece's deficit in 2009 equalled 13.6 per cent of its economic output and could rise by up to half apercentage point. The officehad previously predicted 12.9 per cent.

The agency also revised the ratio of government debt to GDP to 115.1 per cent, up from 113.4 per cent and the second-highest in the EU, after Italy.

The deficit revision led rating agency Moody's to downgrade Greece's debt Thursday.

German Chancellor Angela Merkel told reporters in Berlin that Greece mustconclude talks with the IMF before it is decided how much money the country will get. She also stressed the need to aid Greece to help stabilize the eurozone.

Spain, which will contribute the equivalent of roughly $4.79 billion Cdnunder the plan, welcomed the Greek request.

"We're all ready to put it into operation, in other words, we're going to set it in motion as fast as possible," Spanish Deputy Prime Minister Maria Teresa Fernandez de la Vega said in Madrid.