Greece agreed on a rescue package, and it is now clear why the IMF needed to be involved. The previous, 25 billion ($40 billion) line of credit just wasn't near enough. What's worse, already the day after, it is becoming clear that the bailout may not be large enough, as it is based on the crucial assumption that starting next (!!!) year Greece will be able to borrow again from international capital markets. That may be too optimistic, say bond-market specialists. 

The Wall Street Journal reports that with the aid come the austerity measures:

The Greek government has promised to slash and then freeze public-sector wages, raise sin taxes, increase value-added taxes, impose a new levy on businesses, cut pension payments and raise retirement ages for some public-sector workers. Greece also promised to meet budget and debt goals:

• Cut budget deficit by 11% of GDP by 2013, through spending cuts valued at 7% of GDP and revenue increases valued at 4% of GDP.
• Reduce budget deficit to 'well below' 3% of GDP by 2014.
• Reduce debt-to-GDP ratio from 2013, with primary budget surpluses of at least 5% of GDP up to 2020.
• Cut public-sector pay and pensions.
• Raise average retirement age.
• Increase value-added taxes and excise duties.
• Deregulate the labor market and industries.
• Privatize some state industries.
• Cut public investment.
• Crack down on tax evasion.

But even these high drama austerity measures will only save about €30 billion through 2013, meaning the Greek public debt will rise from  115% of GDP to more than  140% by 2014. Part of that is due to the predicted decline in output of – 4% this year. 

Actually these numbers are no surprise, as I (via The Economist) already laid out these figures 6 weeks ago.