Eurozone ministers meet as Greek debt talks resolved

Feb 9, 2012, 16:31 GMT

Athens/Brussels - Eurozone finance ministers were due to discuss a second bailout package for Greece over dinner on Thursday, hours after the government in Athens agreed to adopt harsh new austerity measures and struck a debt write-off deal with private creditors.

'Negotiations with representatives of the European Union, the International Monetary Fund (IMF) and the European Central Bank (ECB) have been successfully concluded,' Greek Prime Minister Lucas Papademos said in Athens.

Arriving in Brussels to meet euro area peers, Greek Finance Minister Evangelos Venizelos added that banks had also agree to forego 100 billion euros (133 billion dollars) in Greek debt holdings.

'We now need the political endorsement of the Eurogroup (panel of eurozone finance ministers) for the final step,' he told reporters.

The agreement should allow Greece to receive 130 billion euros, money it needs by next month to avert going bankrupt.

Negotiations in Athens had stalled after party leaders in the coalition government refused to agree to international creditors' demands for 300 billion euros in cuts to state and private pensions.

George Papandreou of the Socialist Pasok party, Conservative leader Antonis Samaras and right-wing leader Giorgos Karatzaferis on Thursday also agreed on additional measures, including cuts in the minimum wage of up to 32 per cent, 15,000 layoffs and a public sector pay freeze until unemployment falls to below 10 per cent.

Latest figures released Thursday showed the country's jobless rate hitting a record high of 20 per cent in November.

Speaking in Frankfurt shortly after the news of a deal in Athens, European Central Bank (ECB) chief Mario Draghi said there was 'no plan B' for Greece, and expressed confidence that a solution would be found for the country's debt crisis.

'I'm quite confident that all these pieces will fall into place,' Draghi said.

Athens was granted an initial 110-billion-euro bailout from the EU and the IMF in 2010. The sum had been meant to cover its needs until 2013.

But Greece has since ran out of money and now needs a second rescue package by March in order to meet a 14.5-billion-euro bond repayment on March 20.

In October, the EU and the IMF calculated that Athens would require no more than 130 billion euros, but the figure is now thought to be insufficient due to the country's worsened economic outlook.

Draghi refused to comment on reports that the ECB might help plug the funding shortfall by foregoing profits on its Greek bond holdings - a concession thought to be worth about 11 billion euros.

Greece's two largest private and public sector unions reacted to the announcement of more austerity measures by calling a 48-hour-strike starting on Friday.