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Time running out for Greek debt accord

Athens, February 6, 2012

Greece's prime minister scrambled on Sunday to convince lenders and politicians to sign off on a 130 billion euro ($171 billion) rescue, after his finance minister said just hours remained to clinch a deal to avoid a messy default.

A technocrat appointed in November, Prime Minister Lucas Papademos is fighting to prevent cash-strapped Greece from sinking into a chaotic default when big bond redemptions come due next month.

His finance minister said Athens had only until last night to clinch a second financing package from lenders, after euro zone ministers bluntly told him their patience was wearing thin because of Athens' dithering on painful reforms.

'We are on a knife edge,' Finance Minister Evangelos Venizelos said after what he called a 'very difficult' conference call with euro zone counterparts. 'The moment is very crucial.'

Papademos's first mission yesterday was to agree at least a preliminary deal with the 'troika' of foreign lenders on reforms included in the bailout, after several days of talks failed to resolve the thorny issue of cutting wages and spending.

Greek officials have emerged increasingly despondent after each round of talks, complaining that the European Central Bank, European Union and International Monetary Fund troika were stubbornly refusing to yield on demands to cut the minimum wage level, axe holiday bonuses and fire public sector workers.

Greece's lenders, who want spending cuts worth about one per cent of GDP - or just above 2 billion euros - this year, have demanded all political leaders endorse the cuts irrespective of the outcome at the polls.-Reuters




Tags: Europe | Greek | debt deal | creditor |

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