Hopes rise for Greek deal after new budget cuts found

Thu Feb 16, 2012 3:40pm EST
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By Lefteris Papadimas and Jan Strupczewski

ATHENS/BRUSSELS (Reuters) - Hopes rose on Thursday that Greece has finally done enough to secure a second bailout after Athens set out extra budget savings demanded by its international lenders, but the optimism failed to ease tensions with EU paymaster Germany.

Time is running out for Greece to seal the 130 billion euro ($170 billion) rescue and avoid bankruptcy, but Greek officials hope euro zone finance ministers will sign the deal off on Monday - exactly a month before Athens needs the money to repay 14.5 billion euros of debt repayments due on March 20.

The optimism followed deepening acrimony between Athens and northern states in the 17-member currency union, led by Germany, and came only after one proposal to withhold part of the bailout until after Greek elections expected in April was dropped.

"We are almost there," one euro zone official said, expressing hope the deal can be done when the ministers of the Eurogroup meet in Brussels.

"Unless someone really comes up with an idea to undermine the whole deal, it should be approved on Monday," he said.

In a further sign of an emerging agreement, euro zone sources said national central banks in the currency bloc would exchange holdings of Greek bonds this weekend in the run-up to a private sector debt deal to avoid taking forced losses.

With a go-ahead from the Eurogroup ministers, Greece can formally launch a debt restructuring offer to its private creditors which aims to halve the face value of what Greece owes

the investors, slashing its debts by 100 billion euros.   Continued...

A man makes his way during a rainy day in front of the parliament in Athens February 16, 2012.  REUTERS/Yiorgos Karahalis