Greece reaches deal on austerity cuts

PanARMENIAN.Net - Greece has reached a tentative agreement on new austerity cuts demanded by creditors to release a euro130 billion ($173 billion) bailout, hours before a crucial meeting of finance ministers in Brussels, Prime Minister Lucas Papademos' office said Thursday, February 9, AP reported.

A spokeswoman said the agreement with the majority Socialists and the conservatives will allow alternative cuts to those rejected early Thursday during a marathon meeting of the three coalition party leaders. No details were available on what alternative measures would be chosen.

The spokeswoman spoke on customary condition of anonymity.

Mario Draghi, the president of the European Central Bank, confirmed the latest stage in the austerity talks, telling reporters at a press conference in Frankfurt, Germany that the Greek party leaders had accepted the terms of the deal. The ECB is involved in the debt talks along with the European Union and the International Monetary Fund — known as the "troika".

Although all the other cuts demanded by the troika were approved, party leaders had, however, balked at new pension cuts, leaving the bailout in limbo and the threat of bankruptcy high. The deal came just ahead of talks in Brussels between finance ministers from the 17 euro countries.

Greece needs the bailout by March 20 so it will have enough money to redeem euro14.5 billion worth of bonds coming due. If it doesn't make that payment, it will be in default. Financial analysts fear that could set off a chain reaction similar to the financial meltdown triggered by the collapse of investment bank Lehman Brothers in the fall of 2008.