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Greece Battles to Salvage Bailout Package

Greece’s leaders battled to salvage a new 130-billion-euro ($170 billion) EU/IMF bailout on Wednesday, rejecting doubts over their commitment to a punishing austerity package just hours before a conference call of euro zone finance ministers.
But with mistrust of Athens at a record high, several EU sources told Reuters that finance officials in the 17-state currency union were studying whether it was possible to delay part or all of the rescue deal while still avoiding a disorderly default – news which pushed safe haven German Bund futures to session highs.
Finance Minister Evangelos Venizelos insisted that Greece would have clarified all outstanding issues on a 3.3-billion-euro package of cuts in time for a euro zone call scheduled for 1600 GMT, attacking critics in the zone for “playing with fire.”
Greece’s conservative party leader Antonis Samaras, widely tipped as the country’s next prime minister, pledged in writing that if elected he would stick to an agreed program of welfare and job cuts that triggered riots in central Athens this week.
“If New Democracy wins the next election in Greece, we will remain committed to the programme’s objectives, targets and key policies,” Samaras wrote.
But Samaras, who leads voter surveys ahead of an election that could come as early as April, insisted the fast-shrinking Greek economy must also be kickstarted into life and reserved the right to adapt details of the package accordingly.
“Prioritizing recovery along with the other objectives will only make the program more effective and the adjustment effort more successful. Therefore … policy modifications might be required to guarantee the full programme’s implementation,” he said in the letter to Greece’s international lenders.
Greece has said it must initiate a debt swap deal with private sector bondholders by Friday to meet a March 20 deadline for 14.5 billion euros in debt repayments. It was hoping to have the euro zone’s backing for its second bailout this week.
But EU sources said some in the euro zone doubted the commitment of Greece’s leaders to austerity, and queried whether it would be enough to bring Greece’s debt-to-GDP ratio down from 160 percent currently to a target of 120 percent by 2020.
“There are proposals to delay the Greek package or to split it, so that an immediate default is avoided, but not everything is committed to,” one official briefed on preparations for a euro zone finance ministers call later in the day told Reuters.
“They’ll discuss the options,” he said, adding: “There is pressure from several countries to hold off until there is a concrete commitment from Greece, which may not come until after they’ve held elections.”
Samaras’ belated commitment to honor the austerity plan may put that plan on the back burner.
(source: Reuters)

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