Greece’s Prime Minister Lucas Papademos is in a crucial meeting with the heads of the three parties that make up his coalition government to seek fresh assurances that they will faithfully back the country’s reform efforts as demanded by the country’s international creditors.
“This is a crucial day. We must all show strength and seriousness,” George Karatzaferis, leader of the far-right LAOS party that is one of three parties in Papademos’s government, told reporters before entering talks at the premier’s office.
The meeting comes just one day before a European summit in Brussels which is expected to discuss a new multi-billion euro bailout for the country and a related reform program. On Saturday, Greece and its private sector creditors said they were on the verge of a deal to write off EUR100 billion worth of the country’s debt, paving the way for Greece to secure a fresh bailout from its European partners.
In October, European leaders and the International Monetary Fund agreed to provide Greece with EUR130 billion in fresh financing to cover the country’s cash needs through 2015. But the new loan was contingent on a debt write-down plan that would slash Greece’s debt ratio to 120% of gross domestic product in 2020 from an unsustainable 160% currently.
In separate statements, the government and the creditors both noted significant progress in the talks and said a final deal would be announced next week–in tandem with the new loan program.
Effectively, the focus now shifts to Monday’s summit where the continent’s leaders will sanctify–or not–the terms of the debt restructuring and the new loan. But the leaders are also expecting concrete pledges–in writing–from the three party chiefs standing behind Papademos.
Since being named prime minister in November, Papademos has presided over an uneasy alliance of the three parties–the Socialists, the center-right New Democracy party, and the small, nationalist Laos party–as he tries to broker both a new loan deal and a debt write down with the country’s creditors.
The new loan deal is expected to include draconian new austerity measures and other reforms Greece must take to fix its public finances and liberalize its hidebound economy. But with elections tentatively expected in April, Europe has been demanding explicit guarantees that the next Greek government will continue with the reform program.
Although the three parties have declared their allegiance to the Papademos government, party rebels among the Socialists have balked at voting for some of expected reforms, while some New Democracy deputies have also been resistant.
And late last week, the leader of the Laos party, Georgios Karatzaferis, said he would resist European demands for written pledges by the party bosses, describing them as humiliating.
(Source: Dow Jones)
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