EU leaders have agreed a second bailout for Greece that its prime minister says will stave off default and rescue the country from the clutches of financial markets.
Speaking after a summit in the Belgian capital of Brussels yesterday, Greek premier George Papandreou, said the move was a "vote of confidence" in the Greek government and people.
"So far we have managed to avoid default," he said. "We are at a crossroads and definitely the challenges are huge and times ahead will be difficult, but we should and we must succeed."
The beleaguered Socialist leader is under pressure at home to secure the passing of a massive €28bn austerity bill and begin a round of privatisations to help raise an estimated €50bn between now and 2015 for the cash-strapped state.
"It's very painful for me to take these measures," Mr Papandreou said. "If we don't take these measures things would be much worse and Greece would collapse."
Greece is facing a mounting debt bill of more than €340bn and must shave at least €6.5bn off the deficit this year alone.
Without wide-ranging support for the belt-tightening measures, which are due to be voted on next week in two separate sessions, the EU and IMF have said they will pull the plug on the current €110bn bailout, leaving Greece without enough money to pay off a raft of debts in mid-July.
Greece is awaiting a €12bn payment from its international creditors, which is due to be signed off during an emergency euro finance ministers' meeting on July 3 -- after the Greek austerity vote.
"Given the length, magnitude and nature of required reforms in Greece, national unity is a prerequisite for success," EU leaders said.
German Chancellor Angela Merkel said after the summit meeting that she was confident the plan would go through.
Ms Merkel declined to comment yesterday on how much of the cost of the second bailout Greek bondholders would be expected to shoulder.
Germany has previously insisted that a "significant" proportion of the total sum should be borne by the private sector. The details are to be worked out by finance ministers over the next two weeks.
German, French, British, Portuguese, Dutch and Italian banks own more than €100bn of Greek debt.
But Greek opposition leader Antonis Samaras of the conservative Nea Dimokratia party has threatened to scupper the passing of the bill if the prime minister does not reverse a series of tax rises in it.
The measures have just been signed off by a troika of EU and IMF officials, who returned to Greece this week to make sure that a €4bn funding gap they identified in the original plan would be filled.
EU leaders pressed both Mr Samaras, who was also in Brussels, and Mr Papandreou, to ensure a successful vote, given the potential knock-on effects a Greek default would have.
Taoiseach Enda Kenny said that there had been a recognition around the summit table that a negative outcome would have been a disaster for Europe.
"It would trigger all kinds of consequences -- the EU itself would face very difficult decisions," he said, adding that if "anything untoward" were to happen in Greece it was imperative "that others should not be blown sideways".