ATHENS: Greece's finance minister urged lawmakers Thursday to rush through a historic private creditor debt writedown as the EU warned that the country faced a much deeper recession than expected.
The vote on the private sector debt restructuring should not be in doubt -- the two coalition partners, Pasok Socialists and the conservatives New Democracy party, have 193 of 300 seats -- but the timetable is tight.
Finance Minister Evangelos Venizelos pressed lawmakers to pass the legislation as debt deadlines loomed, charging that opponents of the law were "unaware of the situation in which the country is."
Three leftist parties as well as the extreme right have already rejected the draft bill saying it would "be profitable for banks and monopolies and not the population," according to the communist deputy Thanassis Pafilis.
The stakes are high for Greece in a make-or-break second bailout but got higher still Thursday when the European Commission said its economy would shrink 4.4 percent this year, much worse than its previous estimate of 2.8 percent.
Many analysts believe that Greece simply cannot muster the growth needed to sustain its debt burden even after the latest bailout, seeing the accord as simply delaying an inevitable default.
Lengthy Eurogroup talks ended Tuesday setting a series of conditions that Greece must meet by February 29 if the 17-nation eurozone is to bail out Athens for a second time with 237 billion euros ($310 billion).
In Brussels, EU officials said eurozone finance ministers will meet on March 1 to assess Greece's readiness for the programme, needed after a May 2010 110 billion euros bailout proved not enough.
The latest accord provides Athens with loans of 130 billion euros ($172 billion) to 2014 coupled with a 53.5 percent writedown of privately-held Greek sovereign bonds which should slash 107 billion euros from its debt mountain of 350 billion euros.
The government hopes that 66 percent of private creditors will volontarily sign up to the bond swap deal, allowing Athens to impose a collective action clause (CAC) to force hold-outs to accept losses as well.
Earlier, Venizelos said an official offer to private creditors must be made by Friday so the debt swap could be concluded by March 12 for bonds governed by Greek law.
Otherwise, "Greece will face a problem with its reserves on March 14" when it must repay debt of nearly 14.5 billion euros, the finance minister warned.
Greece, stuck in recession for five years and with unemployment above 20 percent and rising, has had to revise up its public deficit targets for this year to 6.7 percent from 5.4 percent of Gross Domestic Product.
The much deeper-than-expected recession now forecast by Brussels could make that revised target even harder to meet, taking Greece further off course.
In Washington, an International Monetary Fund official said IMF participation in a second Greek bailout was essential to make it work but the Fund had still to decide its own level of participation.
The parliamentary vote Thursday comes a day after unions staged another protest in the capital and Greece's second city Thessaloniki against the additional austerity measures required under the package.
On Thursday, hospital workers called for strike in a protest of announced cuts.
The parliament is to debate next 3.2 billion euros ($4.2 billion) in spending cuts crucial to the bailout deal, that have to be approved by Thursday the latest.
Reforms to the health care system aimed at additional cost cuts of up to one billion euros in 2012 by merging hospitals were to be voted next Wednesday.
Comments
Comments are closed for this article.