Greek austerity - 'Final agreement'

2012-02-09 17:01

Athens - A "final agreement" has been reached among Greek political leaders on additional austerity measures demanded by EU-IMF creditors in return for a loan bailout, a government source said on Thursday.

"There is a final agreement on the measures," the source told AFP as eurozone ministers waited in Brussels to decide on the bailout worth €130bn that officials have laboured since October to finalise.

A Eurogroup meeting of finance ministers from the 17 nations using the single currency is due to open at 17:00 GMT in Brussels.

Government spokesperson Pantelis Kapsis said: "An announcement will be issued shortly," declining to go into further detail.

Speaking in Frankfurt, European Central Bank chairman Mario Draghi said the ECB had been informed that a deal had been reached on the requested austerity measures.

Draghi told a news conference that he had received a phone call from Greek Prime Minister Lucas Papademos just minutes earlier, adding: "He told me that agreement has been reached and has been endorsed by major parties".

Marathon talks between the socialist, conservative and far-right party leaders backing Prime Minister Lucas Papademos' interim government early on Thursday ended with agreement on most of the measures demanded to make up a budget deficit shortage of around three billion euros.

15 000 civil service lay-offs

But officials could not agree on how to cover a €625m gap in the deal, raising the daunting prospect that complementary pensions would have to be cut in the midst of a biting recession to make up the shortfall.

Full pensions are already slated for a 15% cut, according to reports, along with a 22% reduction in the minimum wage and 15 000 civil service lay-offs under the measures demanded by the EU, IMF and the European Central Bank.

Greece has run up total debt of about €350bn, roughly 160% of its gross domestic product, and the IMF has insisted that level be brought down to a maximum of 120% of GDP by 2020.

Private creditors are also negotiating a write-off of Greek debts worth at least €100bn, and are to meet on Thursday in Paris, according to a spokesperson.

All eyes are on Greece amid fears a failure to meet its debt obligations - with a bond payment due March 20 - could spark a domino effect that undermines the entire euro common currency project.

- AFP