Greek debt talks stall on pension cuts

Feb 8, 2012, 23:24 GMT

Athens - Critical negotiations on new cost-cutting measures that Greece will have to adopt to get further loans remained stalled Thursday as the governing coalition failed to agree to international creditors' demands for additional cuts to state and private pensions.

A statement from the prime minister's office said that Lucas Papademos and the three leaders of his coalition government, Socialist George Papandreou, Conservative Antonis Samaras and right-wing leader Giorgos Karatzaferis, 'agreed on all points except one, which calls for further discussion and elaboration with international creditors.'

Greek news reports said the three party leaders appeared to disagree on creditor demands for cuts to state and private pensions above a threshold level of 150 euros, following the eight-hour meeting.

'We are conducting tough negotiations on behalf of the Greek people so as to ease their suffering,' Samaras said as he left the meeting.

Reports said Papademos will continue negotiations overnight with representatives of the eurozone and the International Monetary Fund (IMF), known as the troika. He is expected to summon the leaders back to meet, either overnight or early Thursday.

The coalition government is under mounting pressure to accept the debt deal on steep cuts demanded by international creditors, in return for a 130-billion-euro (172-billion-dollar) bailout.

Athens needs the money to avoid a default on bond repayments due in March.

According to the draft deal, which was leaked to Greek media, the government is under pressure to carry out private-sector wage cuts and public-sector sackings, aside from pension cuts.

International creditors are demanding that the private-sector minimum wage be reduced by 22 per cent, from 751 euros (995 dollars) to 590 euros, and for people under age 25 by 32 per cent.

The government will be required to freeze all salary raises until the unemployment rate is reduced to 10 per cent from the current 19 per cent.

Pension cuts of up to 15 per cent will be carried out for many public-sector companies, while the government will be forced to lay off 150,000 public-sector workers by 2015.

The Eurogroup panel of eurozone finance ministers is to meet Thursday in Greece to discuss a second bailout package for Athens, an indication that a deal is close.