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Greece bail-out is money well spent -- Lenihan

Finance Minister Brian Lenihan said an unprecedented bail-out plan for the Greek economy costing the Irish taxpayer up to €1.3bn was money well spent.

Finance ministers from the 16 Eurozone nations have signed off on the joint rescue plan with the International Monetary Fund, amounting to €110bn over a three-year period.

Mr Lenihan said the loans, aimed at preventing troubled Greece from defaulting on massive debts, would benefit everyone using the euro.

"Over the past week almost all member states have seen the difficulties created by the present uncertainty," he said.

"Today's decision will help safeguard the stability of the euro area as a whole and this stability will benefit all Eurozone member states."

The Government is now preparing national legislation to allow Ireland to help in the provision of bilateral loans as part of the agreement.

To access the loans, Greece must make painful austerity cuts. The debt-ridden country has also agreed to additional structural reforms.

Greek prime minister George Papandreou has warned the bail-out will require great sacrifices from the people of his country.

"Since the beginning of the year, the Greek government has shown its determination to address its fiscal challenges," Mr Lenihan said. "Like other euro area member states, we stand ready to play our part to assist and to support in these very challenging times."

After talks in Brussels, finance ministers insisted the unprecedented gesture would restore the stability and credibility of the beleaguered euro on world markets.

But they will only be sure when they see the reaction of stock markets to the three-year loan package and the tough new austerity measures Greece must introduce as a condition of the bail-out.

Under the deal a total of €80bn will be loaned to Greece by the 15 other single currency countries, with the rest supplied by the International Monetary Fund. The deal will only be complete when Eurozone parliaments add their approval, and after a final summit on the issue on Friday, when the 16 Eurozone leaders will gather in Brussels.

German Chancellor Angela Merkel had insisted that a Greek bail-out from its single currency partners would only be considered as "a last resort".

Last night's deal follows a raft of new Greek finance ministry measures which are now predicted to reduce the Greek deficit of nearly 14pc of GDP to below 3pc by 2014.

But the price is public demonstrations in Greece and a planned national strike by public-sector workers against wage and pension cuts, as well as new taxes as part of the plan to avoid debt default.

A statement by EU monetary affairs commissioner Olli Rehn and International Monetary Fund managing director Dominique Strauss-Kahn described the loan deal as unprecedented, but warned that neither the austerity reforms in Greece nor the bail-out could "turn the Greek economy round overnight".

What was needed was a sustained, multi-year effort to slash Greek debt, they said: "To be successful, the programme will require a national commitment that goes beyond political party lines. The support from European countries, the European Commission and the European Central Bank, and the IMF demonstrates a very high level of external commitment, and attests to the goodwill for Greece from the international community. Our collective effort will also contribute to the stability of the euro and will benefit all of Europe."

The hope is the move will restore the euro's fortunes sufficiently to halt its slide in other debt-laden Eurozone countries, chiefly Portugal and Spain.