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Desperate Eurozone to borrow BILLIONS to fund Greece rescue amid fears of crash

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THE eurozone’s bailout fund is borrowing tens of billions so it can fund a rescue plan for Greece, amid fears the country’s debt crisis could once again send shockwaves through the bloc.

The Luxembourg agency responsible for doling out rescue money – the European Stability Mechanism (ESM) – is turning to markets to raise the extra cash needed for the Greek debt relief programme.

The ESM is now issuing €57billion (£49.5bn) in long-term bonds – up 14 per cent from original plans – to cover the bail-out programme.

However, Athens remains at loggerheads with creditors over the long term measures of the deal for fresh cash and debt relief – and the stand-off could last for weeks, as the two sides refuse to back down over controversial austerity measures.

Last month, the ESM froze short-term debt relief for the country, after prime minister Alexis Tsipras announced a one-off Christmas bonus for low-income pensioners.

The move is thought to have angered eurozone officials who are pressing the government to cut pension welfare spending.

It came as eurozone finance ministers approved the debt-relief measures proposed by the ESM.

In a further sign that tensions between the two sides are increasing Athens this week described proposals by the creditors as “irrational”.

The International Monetary Fund (IMF) has also spoken out against demands from the European Commission and said they are not “credible” and will hamper prospects of growth for Greece.

Only through a “Herculean effort” would Athens be able to meet the demands of its creditors under the ESM programme, and through slashing spending in vital services that will derail Greece’s long-term prospects, said the Washington-based fund.

However, the IMF said Athens is still spending far too much on pensions and not asking enough people to pay tax

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