Berlin: The euro zone finance ministers are expected to approve Greece's second bailout in 21 months at a crucial meeting tomorrow as the debt-laden nation fulfilled more conditions set by the European Union (EU) and the International Monetary Fund (IMF) to receive the assistance.
European governments have welcomed the Greek government's decision on Saturday to allow greater oversight of its state revenue and spending by the EU and the IMF, which until now it vehemently opposed as an "interference in its internal
affairs.
The Greek cabinet at an emergency meeting also passed a series of legislations to implement the latest austerity measures passed by parliament last Sunday to convince its EU partners and the IMF ahead of tomorrow's meeting in Brussels that it is determined to fulfil its commitments to secure the 130 billion euro (USD 170 billion) bailout package.
Greece urgently needs the assistance from the EU and the IMF to avoid a default on repaying 14.5 billion euros debts due on March 20.
German Finance Ministers Wolfgang Schaeuble expressed optimism that the finance ministers of the 17 nations using the common currency will finally clear the way for releasing the second bailout, which was offered in October, last year.
"If Greece implements all necessary commitments and reforms till the end of February and clears the remaining questions, then the second aid package can be released," he said in a newspaper interview Sunday.
"We will decide on a complete package on Monday," he said.
"Staggered or step by step commitments will not be the right way forward".
Austrian Finance Minister Maria Felder also was upbeat about an agreement by her colleagues to release the much-needed aid by their cash-strapped partner and to keep it in the euro zone.
"Any other ways will be extremely difficult and very costly", she said in an interview.
Prime Minister Lukas Papademos announced after an emergency meeting of his cabinet in Athens that Greece is now prepared to accept the EU demand for the setting up of an escrow account into which the bailout funds will be paid to ensure that it will be used to service its debts and will not be diverted to other purposes, media reports said.
However, there will be no European commissioner in Greece to monitor the country's spending and implementation of the latest austerity measures passed by its parliament amid massive protests in Athens and in other cities.
There are already mechanisms in place to oversee the implementation of the spending cuts and reforms promised by the government and they must be strengthened, Papademos said.
Greece's European partners have been demanding tighter EU and IMF oversight of Greek spending as a condition to release the second bailout package especially because the country's debt burden continued to mount and the economy plunged deeper into recession even after receiving a 110 billion euro bailout in May, 2010.
European governments are becoming increasingly skeptical whether Greece's politicians will deliver on their latest promises to scale down the country's debt mountain and to take the economy out of its five-year long recession.
Therefore, they demanded as one of the conditions for the second bailout package a written commitment from Greece's main political parties that they will fulfil the latest austerity measures and reforms promised regardless of which party will come to power after the general election in April.
The Greek cabinet agreed that monthly pension above 1,300 euros will be cut by 12 percent and supplementary pensions will be reduced by 20 percent.
These reductions represented about 20 percent income of the pensioners.
The Greek parliament is expected to pass these legislations next week, according to the reports.
They are part of the Greek government's efforts to save an additional 325 million euros it had promised to the "Troika" experts of the EU, the IMF and the European Central Bank (ECB) to fill a gap in around 3.3 billion euros savings envisaged this year through drastic cuts in minimum wages and pensions, freezing of salaries and axing of over 15,000 public sector jobs.
It is expected that parallel to an agreement among the euro zone finance ministers to release the second bailout package, the Greek government and its private creditors may announce a debt write-down deal, which will reduce its massive debts by around 100 billion euros through bond-swap.
Up to 70 percent of Greek government debts will be written off by banks, insurances and other private creditors, according to some reports.
A debt redemption for Greece was originally proposed as part of the second bailout package in October to help the nation to stabilise its crippled economy.
Greece's debt level is one of the remaining issues to be sorted out by the finance ministers.
The Greek government expressed optimism ahead of Monday's meeting that the planned austerity measures and debt write-down will help reduce the country's debt level from the present 160 percent of the GDP to below 125 percent of the GDP in 2020.
Thereby, debt ratio could be brought down close to 120 percent recommended by the "Troika" as a sustainable debt level.
However, an analysis of the "Troika" showed that Greece's present debt burden of around 350 billion euros could be reduced only to around 129 percent of the GDP till 2020, which is seen as very high by some of its euro zone partners.
The euro group "will do everything" to narrow down these differences before tomorrow's meeting, Jean-Claude Juncker, Luxembourg's Prime Minister and chairman of the group said.
In recent weeks, there were doubts whether the debt reduction target could be achieved or Greece will need more financial support from the EU and the IMF.
European governments have welcomed the Greek government's decision on Saturday to allow greater oversight of its state revenue and spending by the EU and the IMF, which until now it vehemently opposed as an "interference in its internal
affairs.
The Greek cabinet at an emergency meeting also passed a series of legislations to implement the latest austerity measures passed by parliament last Sunday to convince its EU partners and the IMF ahead of tomorrow's meeting in Brussels that it is determined to fulfil its commitments to secure the 130 billion euro (USD 170 billion) bailout package.
Greece urgently needs the assistance from the EU and the IMF to avoid a default on repaying 14.5 billion euros debts due on March 20.
German Finance Ministers Wolfgang Schaeuble expressed optimism that the finance ministers of the 17 nations using the common currency will finally clear the way for releasing the second bailout, which was offered in October, last year.
"If Greece implements all necessary commitments and reforms till the end of February and clears the remaining questions, then the second aid package can be released," he said in a newspaper interview Sunday.
"We will decide on a complete package on Monday," he said.
"Staggered or step by step commitments will not be the right way forward".
Austrian Finance Minister Maria Felder also was upbeat about an agreement by her colleagues to release the much-needed aid by their cash-strapped partner and to keep it in the euro zone.
"Any other ways will be extremely difficult and very costly", she said in an interview.
Prime Minister Lukas Papademos announced after an emergency meeting of his cabinet in Athens that Greece is now prepared to accept the EU demand for the setting up of an escrow account into which the bailout funds will be paid to ensure that it will be used to service its debts and will not be diverted to other purposes, media reports said.
However, there will be no European commissioner in Greece to monitor the country's spending and implementation of the latest austerity measures passed by its parliament amid massive protests in Athens and in other cities.
There are already mechanisms in place to oversee the implementation of the spending cuts and reforms promised by the government and they must be strengthened, Papademos said.
Greece's European partners have been demanding tighter EU and IMF oversight of Greek spending as a condition to release the second bailout package especially because the country's debt burden continued to mount and the economy plunged deeper into recession even after receiving a 110 billion euro bailout in May, 2010.
European governments are becoming increasingly skeptical whether Greece's politicians will deliver on their latest promises to scale down the country's debt mountain and to take the economy out of its five-year long recession.
Therefore, they demanded as one of the conditions for the second bailout package a written commitment from Greece's main political parties that they will fulfil the latest austerity measures and reforms promised regardless of which party will come to power after the general election in April.
The Greek cabinet agreed that monthly pension above 1,300 euros will be cut by 12 percent and supplementary pensions will be reduced by 20 percent.
These reductions represented about 20 percent income of the pensioners.
The Greek parliament is expected to pass these legislations next week, according to the reports.
They are part of the Greek government's efforts to save an additional 325 million euros it had promised to the "Troika" experts of the EU, the IMF and the European Central Bank (ECB) to fill a gap in around 3.3 billion euros savings envisaged this year through drastic cuts in minimum wages and pensions, freezing of salaries and axing of over 15,000 public sector jobs.
It is expected that parallel to an agreement among the euro zone finance ministers to release the second bailout package, the Greek government and its private creditors may announce a debt write-down deal, which will reduce its massive debts by around 100 billion euros through bond-swap.
Up to 70 percent of Greek government debts will be written off by banks, insurances and other private creditors, according to some reports.
A debt redemption for Greece was originally proposed as part of the second bailout package in October to help the nation to stabilise its crippled economy.
Greece's debt level is one of the remaining issues to be sorted out by the finance ministers.
The Greek government expressed optimism ahead of Monday's meeting that the planned austerity measures and debt write-down will help reduce the country's debt level from the present 160 percent of the GDP to below 125 percent of the GDP in 2020.
Thereby, debt ratio could be brought down close to 120 percent recommended by the "Troika" as a sustainable debt level.
However, an analysis of the "Troika" showed that Greece's present debt burden of around 350 billion euros could be reduced only to around 129 percent of the GDP till 2020, which is seen as very high by some of its euro zone partners.
The euro group "will do everything" to narrow down these differences before tomorrow's meeting, Jean-Claude Juncker, Luxembourg's Prime Minister and chairman of the group said.
In recent weeks, there were doubts whether the debt reduction target could be achieved or Greece will need more financial support from the EU and the IMF.
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