Eurogroup Chairman Jean Claude Juncker said Wednesday that Greece has made "substantial progress" in convincing other eurozone member-nations to release a new EUR130 billion ($170 billion) bailout loan urgently required by Athens to avoid defaulting on its debts next month.
Juncker made the remarks in a statement after a conference call between eurozone finance ministers on Wednesday. He, however, added that better surveillance mechanisms needed to be put in place to monitor the implementation of austerity measures promised by Greece before the new aid could be released to Athens.
"Substantial further progress has been made since yesterday," Juncker said in the statement."First, we received the strong assurances provided by the leaders of the two coalition parties in Greece's government. Second, the troika finalized and presented its analysis on the sustainability of Greece's public debt."
"Third, further technical work between Greece and the Troika has led to the identification of the required additional consolidation measures of 325 million euros and the establishment of a detailed list of prior actions together with a timeline for their implementation," he said.
Noting that further considerations are necessary regarding the specific mechanisms to strengthen the surveillance of program implementation and to ensure that priority is given to debt servicing, Juncker added: "I am confident that the Eurogroup will be able to take all the necessary decisions on Monday 20 February."
The conference call was held Wednesday after an earlier planned face-to-face meeting of eurozone finance ministers to discuss and finalize the new bailout loan was called off. The meeting was canceled due to Athens' failure to meet some of the conditions demanded in exchange for the aid.
The eurozone ministers had earlier urged Greece to find a further EUR 325 million in savings to cover budget shortfall for 2012 before the meeting originally scheduled for Wednesday. They had also demanded "strong political assurances" from leaders of the political parties in the ruling coalition on the implementation of the program.
Earlier this week, the Greek parliament approved the highly unpopular package of austerity measures even after a minority member in the coalition of Prime Minister Lucas Papademos' government backed off an earlier deal reached on the proposed measures and voted against them. Nevertheless, the measures sailed through parliament on Sunday, backed by the two other coalition partners.
The new bailout package demands a 22% reduction in minimum wages, 15% pension cuts, liberalization of labor laws, convincing private creditors to accept bigger write-downs on their debt holdings and laying-off 15,000 civil servants by end of 2012. The proposed measures are aimed at helping the Greek government save about EUR 3.2 billion.
Greece desperately needs the new bailout to avert a default on repayments next month. A positive outcome in the upcoming meetings of eurozone finance ministers would ensure that Athens has sufficient funds to repay EUR14.5 billion bond due March 20.
Greece, which has an estimated debt of EUR350 billion, has already availed a joint EU-IMF 110-billion-euro rescue loan in May 2010, of which about EUR73 billion have been handed out to Athens in a series of tranches. Nevertheless, EU leaders agreed at a summit meeting held in October to provide Greece with a new EUR130 billion rescue package.
After Wednesday's conference call, Greek finance minister Evangelos Venizelos said the issues raised "will be prepared at a euro working group meeting on Sunday in Brussels so that with good faith, the final decision for the approval of the program is taken and the public announcement of the PSI (debt swap) is made on Monday."
In addition to the talks on the bailout package with other eurozone members as well as the so-called troika of creditors--namely the IMF, EU and ECB, Greece has been holding separate negotiations with its private creditors for persuading them to accept bigger write-downs on their debt holdings.
If the private creditors do agree to a bond swap deal that would cost them almost half their holdings, Greece would reduce its debts by about 100-billion-euros. The second bailout for Greece is tied to the debt-relief-deal with the private creditors.
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