Greek cabinet backs extra austerity measures

Sat Feb 18, 2012 6:18pm EST
 

By George Georgiopoulos

ATHENS (Reuters) - Greece's cabinet on Saturday approved a final set of austerity measures sought by the EU and IMF as a condition for a 130-billion euro ($171 billion) rescue package, raising the chances of a deal next week to avert a chaotic default on its debt.

The approval was largely a formality after Athens last week unveiled details of the extra budget and public sector wage cuts worth 325 million euros to euro zone partners.

Lingering doubts over whether Greece can bring its mountain of debt down to more manageable levels in coming years could still hold up the rescue package. Some officials in the 17-nation currency union warn chances of a deal at a euro zone meeting on Monday are little higher than 50-50.

"The 325 million euros worth of measures were approved unanimously," said one minister, speaking on condition of anonymity, about the cuts, part of a 3.3-billion-euro package of austerity measures that have triggered riots in Athens.

A government official said cabinet had also agreed to launch by March 8 a debt swap for private creditors with the aim of completing it by March 11. The swap is intended to accompany the rescue deal and will mean that creditors take a 70 percent cut in the real value of their holdings.

After months of often acrimonious negotiations, Greek hopes are rising that Monday's meeting in Brussels will endorse the rescue which Athens needs to avoid bankruptcy on March 20 when major debt repayments fall due.

"The Greek people have done everything they can and we are determined to make good on our commitments," Public Order Minister Christos Papoutsis said before the meeting.

In a statement, Prime Minister Lucas Papademos regretted that extra pension cuts could not be avoided, but said the impact was limited because it would only affect the part of the pension above a monthly threshold of 1,300 euros.   Continued...

 
A policeman stands guard in front of a presidential guard during an anti-austerity rally in Athens February 18, 2012. Greece's cabinet tackled on Saturday how to implement austerity demanded by the EU and IMF as a 130-billion-euro ($171-billion) rescue seemed within reach, while the euro zone considered modifying a deal with private creditors to help Athens reduce its huge debts.  REUTERS/Yiorgos Karahalis