Greece must pledge tough reforms for debt swap deal
By Lefteris Papadimas and George Georgiopoulos
ATHENS (Reuters) - Greece must make "difficult" decisions in the coming days to clinch a debt swap agreement and a 130 billion euro bailout package needed to avoid an unruly default, the government said on Tuesday.
Near-bankrupt Greece is struggling to convince skeptical lenders it can ram through spending cuts and labor reform to help bridge a funding shortfall driven by a worsening economic climate and its previous reform plan having veered off track.
With a long-awaited debt swap deal largely almost secured, Athens' focus is now squarely on the reform front. Failure to persuade lenders it can follow through on its pledges could put both the bond swap and the country's latest bailout at risk.
"It's all down to whether the Greeks manage to convince the troika that they will implement the necessary austerity measures," a source close to the talks said, referring to so-called "troika" of foreign lenders - the European Central Bank, the EU and the International Monetary Fund.
Finance Minister Evangelos Venizelos confirmed talks on both the swap and bailout were "converging" and "co-dependent," and said Athens was "one formal step away" from closing a deal with private bondholders to restructure 200 billion euros of debt.
"Without the new (bailout) program we cannot have the necessary funding and the debt swap cannot be completed," he said. "In the next few days, our country needs to take difficult decisions and to complete a gigantic effort which rewards the sacrifices, the achievements and the hopes of the Greek people."
A senior Greek banker earlier said a final accord on the bond swap was on hold until Athens can show it is serious about tackling reforms.
"The debt swap agreement is ready, but it will not be announced before the end of the week and until the government has made certain commitments on reforms, labor issues and the pension system," said the banker, who declined to be named. Continued...