Greece holds vital talks over bailout demands

ATHENS // Greek coalition leaders gathered last night for crucial debt talks with the prime minister to review a draft deal on steep cutbacks demanded by creditors in return for a €130 billion (Dh624bn) bailout.

Leaders of three parties backing the coalition are under intense pressure to accept the new austerity demands and shield the country from bankruptcy. The meeting went ahead after three days of delays.

Their decisions will be announced at a meeting with the prime minister, Lucas Papademos, after the parties were handed a 50-page English-language draft agreement, drawn up with the country's debt inspectors. Greece has already accepted a demand to fire up to 15,000 workers in the public sector this year, but is under pressure to impose deeper cuts, including reductions in pensions and the minimum wage.

It was not clear whether the parties - the majority Socialists, main rival conservatives, and small right-wing Laos party - would accept the demands. "Austerity measures are like shoes that are too tight. Sooner or later, you want to kick them off," Laos leader George Karatzaferis was quoted as saying by state TV.

The coalition talks have been repeatedly postponed this week to make time for negotiations with representatives of the European Union, the European Central Bank and the International Monetary Fund, on whose approval the continued flow of Greece's rescue loans depends.

Without the bailout, Greece would not have enough money to pay a bond redemption payment due on March 20, triggering a default that risks sending shockwaves throughout the global economy.

As anger mounts in Greece at the prospect of further economic pain, patience is running out abroad.

The German chancellor Angela Merkel's spokesman said Greece must swiftly return to a viable path. "This is not a question one can take a lot of time to tackle," Steffen Seibert said. "It is important that the negotiations now come to an end".

Late on Tuesday, private creditors signalled progress on a separate, linked agreement that would cut the country's privately held debt load by 50 per cent, or €100 billion. Banks, pension and hedge funds and other private sector holders of Greek debt are expected to swap their bonds for new ones worth 50 per cent less than the original face value, with longer repayment terms and a lower interest rate.