Greece gets 1st EU bailout cheque

Greece received an $18.4-billion cheque from the EU on Tuesday, the first European instalment of a $140-billion bailout aimed at saving the nation's economy from collapse.

Greece received an $18.4-billion cheque from the EU on Tuesday, the first European instalment of a $140-billion bailout aimed at saving the nation's economy from collapse.

A Greek protester throws tracts during a demonstration in Athens on May 14, 2010. ((Pascal Rossignol/Reuters))

The funds have come just in time, as Greece must pay more than $11.4 billion worth of bonds coming due on Wednesday.

Although it resisted for as long as possible, Athens recently acknowledged it could not pay off its maturing debt without the emergency loans, which would have dealt a severe blow to the domestic economy and the euro currency.

Greece received the first instalment of the International Monetary Fund's bailout portion last week, in the form of a $7-billion payment.  

To secure the loans, the centre-left government of Prime Minister George Papandreou has passed painful austerity measures, cutting salaries and pensions, raising consumer taxes and pledging to crack down on rampant tax evasion.

The measures have led to a backlash by labour unions, who have staged a series of strikes in recent months. But officials are adamant that it must be done, and the belt-tightening has spread across Europe.

Spain and Portugal drafted new spending reductions last week under pressure from Germany and others who provided a $1-trillion rescue package in case they risk defaulting on mounting debt. Both governments have pledged Greek-style austerity measures and cutbacks that officials acknowledge will eat into GDP growth.

Unpaid taxes

The Greek spending crisis took a bizarre turn on Monday as the country's deputy tourism minister resigned amid allegations that her husband, a popular singer and former film star, owes millions in unpaid taxes.

Angela Gerekou, a 51-year-old former actress who once posed topless for a Greek men's magazine, stepped down hours after the scandal broke in a daily newspaper.

Gerekou resigned "for reasons of sensitivity and sensibility, so that there cannot be the slightest pretext to hurt the government," the government said in a statement, adding that she claimed she had no involvement in the tax affairs of her husband, Tolis Voskopoulos.

Supporters of the Greek Communist party raise their fists during a rally against the government's austerity measures in Athens on May 15, 2010. ((John Kolesidis/Reuters))

Tax evasion is rampant in Greece, and the government has fingered it as a major cause of the country's deficit.

The government recently published the names of alleged high-profile tax cheats (mostly doctors accused of not issuing receipts) and most famously has sought to catch tax evaders by using satellite photos to spot undeclared swimming pools — an indicator of taxable wealth.

Voskopoulos was swept up in that probe and officials confirm he faces criminal prosecution for $7 million in unpaid taxes and fines.

Voskopoulos, one of the best-known representatives of Greece's older generation of popular singers and nightclub stars, has had his assets frozen pending the investigation.

With files from The Associated Press