Greece's coalition leaders were locked in last ditch talks at Prime Minister Lucas Papademos' official residence last night over a final round of talks on radical budget cuts and a debt deal to avert default.
The leaders of the socialist, conservative and far-right leaders must approve reported cuts to the minimum wage — strongly resisted by unions — in addition to pension reductions and 15,000 civil service redundancies.
"I am troubled by the innermost intentions of our creditors," far-right leader George Karatzaferis told reporters on his arrival, adding that a pressing schedule was being used to "blackmail" Greece.
Greece kept the Eurozone and financial markets on edge during the day, with the meeting of leaders backing Papademos' government repeatedly postponed since Sunday.
Agreement on new measures demanded by the EU, the IMF and the European Central Bank — known as the ‘troika' — and on a debt-write down by banks would open the way for a second rescue and so close a key chapter in the Eurozone crisis.
The party heads earlier in the day received a 50-page text with the austerity cuts demanded in return for new loans under a €130-billion (Dh628 billion) Eurozone bailout originally agreed in October.
The text was drawn up during a night of marathon talks between Papademos and representatives from the troika aimed at setting up a second rescue for Athens following an initial bailout worth €110 billion in May 2010.
On the bond markets, where tension has eased markedly since the beginning of the year, the reaction was subdued.
"Whether this turns out to be the good news that the market is currently expecting, or another short term rally followed by a painful pullback remains to be seen," analyst Alistair Cotton said in a note.
"But there is reason to remain sceptical given the number of times over the last two years news about a Greek rescue deal moved the market in exactly the same way; euro positive on the rumour, retracement on the fact," he said.
The coalition party leaders were given a few hours to study the plan, which was said to include cost-saving measures worth €3.2 billion. Savvas Robolis, a senior labour analyst at leading private-sector union GSEE, said the minimum wage cuts would affect 325,000 people or 17 per cent of the workforce.
"The minimum wage will drop to around €500... and this will create a €2.2-billion shortage in health and pension funds," he said.
The country is running out of time to agree the deal and to conclude a separate debt write-off with banks and other private creditors worth at least €100 billion.
Greece has run up total debt of about €350 billion, roughly 160 per cent of its gross domestic product, and the IMF insisted it be brought down to a maximum of 120 per cent of GDP. On Tuesday, Papademos met Charles Dallara, head of the Institute of International Finance and chief representative in the discussions.
15,000 jobs to be axed
Press reports have said that the latest measures, reportedly tweaked up to the last minute, include a cut of 22 per cent in the minimum wage and 15 per cent cuts in complementary pension programmes, along with a separate 15 per cent reduction for public utility pensioners.
About 15,000 Greek public sector jobs are thought likely to be axed.
The new funding is vital if Greece is to avert a debt default on March 20, when it must repay €14.5 billion to bond holders.
If a deal emerges, it will be presented by Finance Minister Evangelos Venizelos to Eurozone finance ministers today and be tabled in parliament tomorrow for approval by Sunday, the semi-state Athens News Agency reported. From gulfnews