Greece given Euro leaders at a crisis summit issued a declaration on a second bailout package for indebted Greece – expected to top €100b -- but it will come on condition the parliament in Athens approves €28 billion of new spending cuts and €50b of state sell-offs.
Euro leaders say Greece must pass €28 billion($A38b) of budget cuts over the next five years, and up to €50 billion ($A67b) in privatised state holdings, in the next few days under the conditions of a second bail out package
European leaders ordered the "implementation by early July" of a new Greek bailout package and have pledged to do "whatever necessary" to maintain currency stability, in a draft declaration drawn up at an EU crisis summit.
"The euro area heads of state and government call on finance ministers to complete work on all these elements to allow their implementation by early July," the document said, referring to "additional funding" over and above last year's €110-billion rescue.
The declaration, which can still change over late-night talks, spells out that a second bailout, again expected to top €100 billion, will draw on a combination of "official" or taxpayer monies, and "private sources."
It says the finished design of a rescue demanded by regular backer the IMF and worried international partner, the United States, should also allow "disbursement in time to meet Greece's financing needs in July."
That can be taken to refer to a €12-billion tranche of loans from the first bailout that euro finance ministers refused to agree to hand over in talks this week, opting instead to await the outcome of a pending Greek parliamentary vote on massive new austerity cuts and sell-offs scheduled by June 30.
GREECE MUST PASS €$50 BILLION IN BUDGET CUTS
The leaders said Greek lawmakers must pass 28 billion euros of budget cuts over the next five years, and up to €50 billion in privatised state holdings, "as a matter of urgency in the coming days."
They called on "all political parties in Greece to support the programme's main objectives," saying "national unity is a prerequisite for success."
Greek authorities hammered out the make-up of those cuts during negotiations with the European Commission, the European Central Bank and the International Monetary Fund in Athens on Thursday.
Asked in Athens whether Greece had asked for additional financing, IMF spokesman David Hawley said it had "not received a request for a new arrangement from Greece" so far.
Athens is "strongly committed to continue a very difficult but important program for major changes, radical changes to make our economy viable," he added.
GREECE MUST IMPLEMENT SPENDING CUTS
Earlier as the summit opened European leaders demanded Greece legislate massive new spending cuts next week as they opened a two-day summit pivotal to efforts to prevent the euro crisis from rocking the global economy.
"There is no Plan B, Greece has to do what needs to be done," said Luxembourg Prime Minister Jean-Claude Juncker, who heads the Eurogroup of finance ministers, on arriving in Brussels for the European Union talks on Greece.
The IMF and eurozone partners refused this week to release a 12-billion-euro tranche of loans from last year's 110-billion-euro bailout ($156 billion) until the Greek budget slippage is remedied.
Finance ministers from the 17-nation eurozone are to meet again on July 3 -- days ahead of a deadline for Greece to repay maturing debt or face default.
But there are doubts given Papandreou's slim, five-seat majority in the assembly and on Thursday Greek unions announced a general strike timed to coincide with the vote.
Should Papandreou lose the vote, Greece could default, opening up a possible exit of the eurozone that would likely threaten the entire bloc.
'EURO FINANCIAL SYSTEM THREATENED'
Warning that Europe must act swiftly to avoid damaging contagion, US Federal Reserve chief Ben Bernanke said earlier that in the event of "a failure to resolve that situation, it would pose threats to the European financial systems, the global financial system and to European political unity."
His remarks followed scathing comments from US Treasury Secretary Timothy Geithner and a warning from the IMF of "large global spillovers."
Any second bailout of Athens will also involve banks agreeing to lend the Greeks more money in the form of a rollover of bonds due for redemption over the summer.
In the latest sign of knock-on effects from that approach, Moody's ratings agency said on Thursday it had put the ratings of 16 Italian banks on review for possible downgrade.
