GREEK BAILOUT:EUROPEAN CENTRAL BANK (ECB) chief Jean Claude Trichet last night warned Greece that the country will have to adopt yet more austerity measures if the €30 billion austerity plan tied to its €110 billion rescue misfires.

The loan package, which includes a €10 billion contingency reserve for Greek banks, was endorsed by euro group finance ministers at an extraordinary meeting in Brussels yesterday.

“We recognise that the programme demands great sacrifice from the Greek people and, given the serious situation facing their country, it cannot be expected to turn the economy around overnight.

“A sustained, multiyear effort will be needed to bring down Greece’s debt and spur competitiveness,” said EU economics commissioner Olli Rehn and International Monetary Fund (IMF) managing director Dominique Strauss-Kahn in a joint statement.

Greek prime minister George Papandreou asked the EU and IMF authorities to activate the rescue 10 days ago after a sharp escalation in his country’s borrowing costs.

These rose to record levels as the markets questioned the scope of the aid plan and Germany’s willingness to participate in it.

The ministers signed off on the deal as Greece promised to adopt a swingeing round of new austerity measures, heavily weighted in favour of taxation increases, to trim its deficit by €30 billion.

The austerity plan was signed off in Athens on Saturday night at the conclusion of talks between the European Commission, the ECB and the IMF.

The package is to be front-loaded and Athens promised to introduce legislation as early as today to effect all of the various measures.

Mr Rehn said the Greek government’s performance in meeting targets will be reviewed every quarter, as will its requirement to draw down loans from the emergency fund.

Addressing reporters last night in Brussels, Mr Trichet said the Greek authorities should “stand ready” to take any further measures that may become appropriate to achieve the objectives of the financial reform programme.

The ministers approved the deal after reviewing reports from the commission and the ECB which each said it was now appropriate to trigger a “last resort” aid programme.

“Eurogroup ministers concur with the commission and the ECB that market access for Greece is not sufficient and that providing a loan is warranted to safeguard financial stability in the euro area as a whole,” said Luxembourg’s prime minister Jean-Claude Juncker, who is head of the minsters’ group.

Greek finance minister George Papaconstantinou told reporters that his country will meet all its repayment obligations as they fall due.

“We are fully aware that this is a programme that is not going to be easy.

“It is not going to be easy on Greek citizens, despite the efforts that have been made and that will continue to be made,” the minister said.

“We’re not under tutelage and we don’t feel that way,” he added.

Euro countries will provide up to €80 billion over three years to Greece, Ireland’s contribution being €1.3 billion.

The IMF, which is fast-tracking the aid, will provide €30 billion.

Mr Rehn said the rescue mechanism was structured in such a way as to ensure the interest paid by Greece “in every case will be higher than the interest paid” by the lending country.

The rescue was “unprecedented in its scope” and in the efforts being made by the Greek authorities to correct its budget deficit, which was 13.8 per cent last year.

Activation of the aid plan, which follows months of much political wrangling over the nature and scope of the intervention, comes as Greece prepares to repay an €8.5 billion bond due within weeks.

“The first disbursements will be made available before the payment obligations of the Greek government fall due on May 19th.”

Some €45 billion will be available to the country in the first year of the plan.