Under a deal struck by eurozone finance ministers on Sunday (2 May), Athens would receive 80 billion euros in bilateral loans in three years spanning until 2012. 30 billion would come from the International Monetary Fund (IMF).
Eurozone member states would contribute to the loans according to their respective holdings of the European Central Bank's capital, making Germany and France the two largest contributors to the aid plan.
Greece will receive 30 billion euros from the euro zone in 2010. Athens will get the first funds before 19 May, when it has to pay back 8.5 billion euros in debt.
The aid package is expected to allay investor concerns of an imminent default. But there is still an open question mark over political approval across Europe.
Eurozone finance ministers have recommended the deal, but heads of state or government also need to give their blessing at a summit on Friday (7 May). Parliaments in Germany - and other member states - must also give their approval.
Speaking on Sunday, German Economy Minister Rainer Bruederle saidChancellor Angela Merkel's cabinet would review the deal on Monday before deciding whether to contribute.
His guarded response to the multi-billion euro financial package reflected deep German resentment at having to rescue Greece, which manipulated its figures to join the euro zone in 2001 and has lived beyond its means ever since.
German Chancellor Angela Merkel on Sunday said she would work to get parliamentary approval for a Greek rescue package.
At the summit, EU leaders are to exchange information on progress in the parliamentary approval process for the loans in their respective countries. Eurogroup Chairman Jean-Claude Juncker said there was no chance of the leaders changing the decision.
New austerity measures
On Sunday, Greece agreed a package of austerity measures under which it aims to cut its budget deficit by 30 billion euros over three years on top of measures already agreed, Finance Minister George Papaconstantinou said.
Under the deal with the European Union and International Monetary Fund (IMF), Greece plans to cut the deficit to 8.1% of gross domestic product (GDP) in 2010, 7.6% in 2011 and 6.5% in 2012.
The deficit would not fall below the EU's 3% of GDP limit until 2014. Debt was expected to rise to nearly 150% in 2013, before falling from 2014.
Athens also sharply revised down its expectations for the economy. GDP is now expected to contract by 4.0% in 2010, compared with a prior government forecast of a 2.25% drop, and return to growth in 2012 rather than 2011, as previously anticipated.
"We are all being called to make a choice," Papaconstantinou told a news conference in Athens. "The choice is between collapse or salvation. The choice is between fleshing out a very ambitious and difficult three-year programme of fiscal consolidation, a programme of structural reforms [...] or the country reaching an absolute dead-end."
He said the measures included a rise in value-added tax (VAT) to 23% from 21%, a 10% hike in fuel, alcohol and tobacco taxes and a further reduction in public sector salaries and pensions.
Strikes
Prime Minister George Papandreou made clear that the population must be prepared to make major sacrifices. "I want to tell Greeks very honestly that we have a big trial ahead of us," he said.
But unions showed no signs of backing down, urging people to join in nationwide strikes planned for Wednesday.
"These measures are tough and unfair," said Stathis Anestis, a spokesman for private sector union GSEE. "They lead workers to misery and the country deeper into recession."
Public sector union ADEDY, which represents about 500,000 workers, also vowed to fight the measures. "We will continue and we will intensify our protests," said Ilias Ilipopoulos, the union's general secretary.
German campaign issue
At Germany's request, eurozone heads of state and government will meet on 7 May to rubber-stamp the ministers' decision to approve the aid package for Greece.
German Chancellor Angela Merkel has said on several occasions that a final decision to unblock bilateral loans to Greece should be taken at the highest level and a summit of eurozone leaders should be organised for this.
Greece's woes became a top campaign issue a week ahead of a key regional election in Germany's most populous state, where Merkel's conservative Christian Democrats face a defeat that could rob them of their majority of the upper house in Berlin.
North Rhine-Westphalia state premier Juergen Ruettgers, a conservative ally of Merkel, demanded new conditions for the financial bailout, including sending a European commissioner to Athens to oversee spending cuts and Greek accounting.
"We can't give Greece any blank cheques," Ruettgers told Der Spiegel news magazine. "It's got to be clear that Greece will have to pay back the money and that there will be a tough savings package that will be controlled."
Crisis of confidence in the euro zone
Germany's reluctance to approve Greek aid has highlighted political tensions within and among rich eurozone countries over how to handle debt crises in the zone.
Economists estimate that if Portugal, Ireland and Spain eventually come to require similar three-year bailouts, the total cost could be some 500 billion euros. Politically, this would be very difficult for the euro zone.
The European Commission is to propose a permanent mechanism for handling such crises on 12 May, possibly drawing on a German proposal for a European Monetary Fund. But actually creating the mechanism may require contentious changes to the EU treaties that would require many months.