Index.php

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The International Monetary Fund (IMF) and what is now known as the World Bank, were set up to manage the post-World War II global economy.
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The Greek PM has warned the nation of a collapse in living standards if MPs fail to pass an unpopular austerity bill demanded in return for a 130bn-euro ($170bn; �110bn) bailout.
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They were conceived in 1944 at a conference in Bretton Woods, in the US state of New Hampshire.
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In a TV address, Lucas Papademos said Greece was "just a breath away from Ground Zero".
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By fostering economic cooperation and helping countries with balance of payments problems the founders hoped to avoid a repeat of the 1930s Great Depression.
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The cabinet has approved the measures but five government ministers resigned.
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The IMF aims to preserve economic stability and to tackle - or ideally prevent - financial crises. Over time, its focus has switched to the developing world.
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Unions are holding a 48-hour strike, and thousands of protesters rallied in central Athens against the measures.
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The World Bank's predecessor - the International Bank for Reconstruction and Development - was set up to drive post-war recovery.
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Riot police were on standby after clashes on Friday, but the demonstrations were mostly peaceful.
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Now, it is the world's leading development organisation, working for growth and poverty reduction.
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The austerity measures are being demanded by the eurozone and IMF - they must now be passed by the Greek parliament and approved by European finance ministers.
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Owned by the governments of its 187 member states, the Bank channels loans and grants and advises low and middle-income countries.
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Some MPs from the governing parties are expected to vote against the bill, the BBC's Mark Lowen in Athens reports.
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The IMF is funded by a charge - known as a "quota" - paid by member nations. The quota is based on a country's wealth and it determines voting power within the organisation; those making higher contributions have greater voting rights.
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But analysts say the package should still have enough support in parliament, because Pasok, the largest party, and its coalition ally New Democracy account for more than 230 deputies out of a total of 300.
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Catastrophe fear
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The IMF acts as a lender of last resort, disbursing its foreign exchange reserves for short periods to any member in difficulties.
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Mr Papademos said the measures would "decide the country's future" and enable it to stay inside the euro.
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Continue reading the main story
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What went wrong in Greece?
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Since they were conceived, the IMF has been run by a European and the World Bank by a US national.
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An old drachma note and a euro note
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    Greece's economic reforms, which led to it abandoning the drachma as its currency in favour of the euro in 2002, made it easier for the country to borrow money.
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The IMF and the Bank have served as a rallying point for disparate causes - from environmentalists to anarchists - and meetings have occasionally been accompanied by violent street protests.
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The opening ceremony at the Athens Olympics
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    Greece went on a big, debt-funded spending spree, including paying for high-profile projects such as the 2004 Athens Olympics, which went well over its budget.
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Protesters and critics cite the exploitation of the poor and the environment and argue that freer trade threatens the livelihoods of millions of people.
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A defunct restaurant for sale in central Athens
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    The country was hit by the downturn, which meant it had to spend more on benefits and received less in taxes. There were also doubts about the accuracy of its economic statistics.
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The IMF has admitted that forcing developing countries to open their markets to foreign investors can increase the risk of financial crises.
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A man with a bag of coins walks past the headquarters of the Bank of Greece
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    Greece's economic problems meant lenders started charging higher interest rates to lend it money. Widespread tax evasion also hit the government's coffers.
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Its former managing director Horst Koehler said in 2002 that the benefits of globalisation had not been equally shared. But he added that "the objective should not be less globalisation but more and better globalisation."
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Workers in a rally led by the PAME union in Athens on 22 April 2010
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    There have been demonstrations against the government's austerity measures to deal with its debt, such as cuts to public sector pay and pensions, reduced benefits and increased taxes.
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Greek Prime Minister George Papandreou at an EU summit in Brussels on 26 March 2010
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    The EU, IMF and European Central Bank agreed 229bn euros ($300bn; �190bn) of rescue loans for Greece. Prime Minister George Papandreou quit in November 2011 after trying to call a referendum.
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Greece's problems have made investors nervous, which has made it more expensive for other European countries such as Portugal to borrow money.
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    Eurozone leaders are worried that if Greece were to default, and even leave the euro, it would cause a major financial crisis that could spread to much bigger economies such as Italy and Spain.
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Lucas Papademos
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    Under Prime Minister Lucas Papademos, Greece is trying to negotiate a big write-off of private debts and secure a second bail-out of 130bn euros ($170bn, �80bn) before a 20 March deadline.
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"The social cost of this programme is limited in comparison with the economic and social catastrophe that would follow if we didn't adopt it," he said.
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Savings would be lost, the government would be unable to pay wages or salaries, and imports of fuel, medicine and machinery would be disrupted, he added.
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Earlier, Greek conservative leader Antonis Samaras said all his party's MPs must vote in favour of the bailout law.
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Mr Samaras, whose New Democracy party is a member of the governing coalition, said any rebels would face being dropped as parliamentary candidates.
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Deputy Foreign Minister Mariliza Xenogiannakopoulou, who quit on Friday afternoon, is the most senior defection so far.
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Her Pasok party, the largest in the coalition, also suffered the loss of a deputy labour minister on Thursday.
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The austerity cuts include:
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    * 15,000 public-sector job cuts
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    * liberalisation of labour laws
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    * lowering the minimum wage by 20% from 751 euros a month to 600 euros
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    * negotiating a debt write-off with banks.
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These were presented to a eurozone ministers in Brussels on Thursday evening.
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But they want a further 325m euros in savings for this year and also insist that Greek leaders give "strong political assurances" on the implementation of the packages.

Revision as of 05:15, 15 January 2013

The Greek PM has warned the nation of a collapse in living standards if MPs fail to pass an unpopular austerity bill demanded in return for a 130bn-euro ($170bn; �110bn) bailout.

In a TV address, Lucas Papademos said Greece was "just a breath away from Ground Zero".

The cabinet has approved the measures but five government ministers resigned.

Unions are holding a 48-hour strike, and thousands of protesters rallied in central Athens against the measures.

Riot police were on standby after clashes on Friday, but the demonstrations were mostly peaceful.

The austerity measures are being demanded by the eurozone and IMF - they must now be passed by the Greek parliament and approved by European finance ministers.

Some MPs from the governing parties are expected to vote against the bill, the BBC's Mark Lowen in Athens reports.

But analysts say the package should still have enough support in parliament, because Pasok, the largest party, and its coalition ally New Democracy account for more than 230 deputies out of a total of 300. Catastrophe fear

Mr Papademos said the measures would "decide the country's future" and enable it to stay inside the euro. Continue reading the main story What went wrong in Greece?

An old drachma note and a euro note 

   Greece's economic reforms, which led to it abandoning the drachma as its currency in favour of the euro in 2002, made it easier for the country to borrow money.

The opening ceremony at the Athens Olympics 

   Greece went on a big, debt-funded spending spree, including paying for high-profile projects such as the 2004 Athens Olympics, which went well over its budget.

A defunct restaurant for sale in central Athens 

   The country was hit by the downturn, which meant it had to spend more on benefits and received less in taxes. There were also doubts about the accuracy of its economic statistics.

A man with a bag of coins walks past the headquarters of the Bank of Greece 

   Greece's economic problems meant lenders started charging higher interest rates to lend it money. Widespread tax evasion also hit the government's coffers.

Workers in a rally led by the PAME union in Athens on 22 April 2010 

   There have been demonstrations against the government's austerity measures to deal with its debt, such as cuts to public sector pay and pensions, reduced benefits and increased taxes.

Greek Prime Minister George Papandreou at an EU summit in Brussels on 26 March 2010 

   The EU, IMF and European Central Bank agreed 229bn euros ($300bn; �190bn) of rescue loans for Greece. Prime Minister George Papandreou quit in November 2011 after trying to call a referendum.

Greece's problems have made investors nervous, which has made it more expensive for other European countries such as Portugal to borrow money. 

   Eurozone leaders are worried that if Greece were to default, and even leave the euro, it would cause a major financial crisis that could spread to much bigger economies such as Italy and Spain.

Lucas Papademos 

   Under Prime Minister Lucas Papademos, Greece is trying to negotiate a big write-off of private debts and secure a second bail-out of 130bn euros ($170bn, �80bn) before a 20 March deadline.

BACK 1 of 8 NEXT

"The social cost of this programme is limited in comparison with the economic and social catastrophe that would follow if we didn't adopt it," he said.

Savings would be lost, the government would be unable to pay wages or salaries, and imports of fuel, medicine and machinery would be disrupted, he added.

Earlier, Greek conservative leader Antonis Samaras said all his party's MPs must vote in favour of the bailout law.

Mr Samaras, whose New Democracy party is a member of the governing coalition, said any rebels would face being dropped as parliamentary candidates.

Deputy Foreign Minister Mariliza Xenogiannakopoulou, who quit on Friday afternoon, is the most senior defection so far.

Her Pasok party, the largest in the coalition, also suffered the loss of a deputy labour minister on Thursday.

The austerity cuts include: 

   * 15,000 public-sector job cuts
   * liberalisation of labour laws
   * lowering the minimum wage by 20% from 751 euros a month to 600 euros
   * negotiating a debt write-off with banks.

These were presented to a eurozone ministers in Brussels on Thursday evening.

But they want a further 325m euros in savings for this year and also insist that Greek leaders give "strong political assurances" on the implementation of the packages.

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