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Critical day for Greece

09/02/2012 11:00
Greek Finance Minister, Evangelos Venizelos will join the critical Eurogroup meeting with no final decision on the new cutbacks demanded by troika.

The meeting between the party leaders supporting the interim government and Prime Minister, Lucas Papademos last night on the new memorandum, which brings sweeping changes to the labour relations and huge cutbacks in salaries, lasted until dawn without achieving full compliance.

Supplementary pensions were the big crunch to a unanimous decision at the same time that time margins get narrower since the Eurogroup meeting has been scheduled for 7.00 pm.

Developments will be crucial as the meeting of the European leaders in Brussels might reach an agreement on the loan contract to Greece, to be also attended by IMF via Christine Langarde.

International news agencies talk about a delay in talks. At the same time in Paris, deliberations for the finalization of PSI+ plan, with which private investors will agree to lose €100 billion of the €200 billion that Greece owes, continue.

Information that negotiations with troika and the political leaders will continue for the next two weeks give a new dimension to the issue. The two parties will try to find the golden mean and to overcome the supplementary pensions obstacle.

The issue affects €0.3 billion of the €3 billion of cutbacks that the Greek government must achieve for the bailout plan of €130 billion to be adopted.

But even if everything goes well, there are doubts as to whether the new bailout package, originally agreed in late October, will be enough to make the Greek debt of €360 billion viable.

Debt currently stands at 160% of the Greek GDP and the objective is to push it down to 120% by 2020.

To achieve this target, pressures on the European Central Bank – which holds Greek bonds of €40bn – to accept losing €15 billion, mounted. ECB will hold a meeting to examine the euro area developments today.

Greece’s survival

“I leave for Brussels on hope that the Eurogroup will take a positive decision on the new program, on which the survival of the country for the next few years depends”, Mr. Venizelos said.

It is time of responsibility for all. There are no margins for other expediencies.

On the question whether issued are closed, Mr. Venizelos said that in an announcement released few hours ago, the Prime Minister said that all issues have been agreed but one.

The feverish processes for the closure of pending issues have affected the international markets, which are waiting for the results of the consultations to determine the future of Greece and the EU in general.

The Athens and the Cyprus stock markets opened with losses today while in Europe most indices go up.