Greek plan for further cuts helps to lift gloom over default
HOPES rose yesterday that Greece had finally done enough to secure a second bailout package worth €130bn after Athens set out extra budget savings demanded by its international lenders.
Time is running out for Greece to secure the new funds to ensure it can avoid a chaotic default when €14.5bn of debt repayments fall due on March 20.
The optimism sliced through a mood of deepening acrimony between Athens and northern states in the 17-member currency union and came only after one proposal to withhold part of the bailout until after Greek elections in April had been dropped.
"We are almost there," one eurozone official said.
"Unless someone really comes up with an idea to undermine the whole deal, it should be approved Monday," the official said of a regular meeting of the currency bloc's finance ministers in Brussels.
In a further sign of an emerging accord, eurozone sources said national central banks in the currency bloc would this weekend exchange holdings of Greek bonds in the run-up to a private sector debt deal to avoid taking forced losses.
With a go-ahead from the eurozone finance ministers, Greece can formally launch a debt restructuring offer to its private creditors which aims to halve in nominal terms what Greece owes to investors, slashing its debts by €100bn.
"There is no certainty but there is cautious optimism," said Antonis Samaras, leader of Greece's conservative New Democrats and the favourite to win the elections.
"Greece has done what it had to do."
A Greek government spokesman confirmed that Athens expected to get the green light from the eurozone on Monday for the debt swap deal with banks and insurers.
The euro rose, European shares recovered losses and safe haven German Bunds hit session lows in response to developments which could help allay the two-year debt crisis.
Greek government sources said Athens had agreed with the EU and IMF on how to fill the €325m hole in a set of €3.3bn in budget cuts adopted by parliament on Monday as rioters torched and looted buildings in the capital.
Two sources said €100m would come from defence cuts, about €90m by bringing forward some public sector wage reductions and another €135m would be taken from the health, labour and interior ministries.
Frustration exploded on Wednesday as Greek President Karolos Papoulias, an 82-year-old veteran of the resistance to Nazi occupation of Greece during World War Two, lashed out at German Finance Minister Wolfgang Schaeuble, who has likened Greece to a "a bottomless pit".
"I cannot accept Mr Schaeuble insulting my country," Mr Papoulias riposted. (Reuters0