Greece to continue bailout talks

Jamaican Times Monday 6th February, 2012

ATHENS - Greek Prime Minister Lucas Papademos has said he would continue intense talks with his coalition partners on austerity measures for a 130 billion-euro EU bailout plan second for Greece.

Papademos is expected to talk with negotiators from the eurozone and International Monetary Fund and later with the leaders of the three parties backing the Greek interim government over the rescue plan.

A crucial meeting between Papademos and his coalition leaders ended Sunday night without any deal on a harsh austerity measures attached to the second EU rescue plan of 130 billion euros ($171 billion) to evade debt default as Athens faces loan repayments of 14.4 billion euros to private lenders by March 20.

But many politicians and unions have opposed any austerity measure for the country that is already deep in recession and a staggering unemployment rate of 19 per cent .

An official statement from the prime minister's office said the political leaders agreed on the necessity to promote austerity measures and reduce public spending by 1.5 per cent of GDP in 2012.

This would mean a saving of 3.3 billion euros by cutting wages and non-wage costs like social security contributions, auxiliary pensions and re-capitalize banks without nationalizing them.

But the three coalition leaders - socialist George Papandreou, Antonis Samaras of conservative New Democracy and Giorgos Karatzaferis of the rightist Popular Orthodox Rally couldn't agree on details of the proposals.

They have called meetings of their party executives before considering them.

In case the agreement fails to come through, the costs would be high and Greece's international loan will be blocked in the absence of EU financial rescue.