Greece expressed hope it can secure its second EU/IMF bailout in as many years and a deal on easing its debt burden next week, but its eurozone peers made clear the months of increasingly ill-tempered argument are not quite over yet.
Finance Minister Evangelos Venizelos said the Greek side had met the final two demands set by the European Union and IMF to seal the 130 billion-euro rescue, which Athens needs to avoid a chaotic default when big debt repayments fall due in March.
But a government official in Germany, which has got involved in testy exchanges with Athens over its will to tackle its problems, said the Greek side still had questions to answer.
Greece pinned its hopes on a meeting of euro zone finance ministers on Monday, after talks in Athens and at the euro zone level failed to produce a deal to avert a Greek bankruptcy which could shake financial markets around the globe.
Venizelos told reporters late on Wednesday the cabinet had decided how to plug a 325 million-euro gap in the 3.3 billion euros of extra budget savings this year which the EU and IMF are demanding.
And he noted that the leaders of both parties in the government of Prime Minister Lucas Papademos had given written undertakings to implement the austerity measures, which provoked a night of fighting, arson and looting in Athens on Sunday.
Exasperated euro zone finance ministers in the Eurogroup had demanded both steps be taken before making a final decision on the bailout.
MISTRUST OF ATHENS
With mistrust of Athens running high, EU sources told Reuters that euro zone officials had considered whether it was possible to delay part or all of the rescue deal while still avoiding a disorderly default.
Greece needs the funds to avoid bankruptcy when 14.5 billion euros of debt repayments fall due on March 20.
“The big issue of the 325 million euros has been finalised and this helped the discussion,» Venizelos said following a lengthy telephone conference call with his euro zone peers.
The Eurogroup had been due to meet in Brussels on Wednesday but its Chairman Jean-Claude Juncker scaled this down to a teleconference, complaining that Greek political leaders had failed to provide written commitments or plug the savings gap.
Greek party leaders have a reputation for working right up to deadlines, or beyond them, raising tensions with the Eurogroup which fears that they will avoid implementing the austerity package in full after elections expected in April.
However, conservative leader Antonis Samaras, the front runner to become the next prime minister, provided his written undertaking to the EU and IMF on Wednesday shortly before the Eurogroup conference call. Socialist leader George Papandreou wrote a similar letter.
Venizelos said he hoped euro zone officials could tie up all the issues before the ministerial Eurogroup meets on Monday, opening the way for a bond swap deal with Greece’s private creditors, known as PSI, which will reduce its debt mountain.
“These issues 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 (bailout) programme is taken and the public announcement of the PSI is made on Monday,» he told reporters.
Greece had said it must initiate a debt swap deal with private sector bondholders by Friday to meet the March 20 debt deadline. It was hoping to win the euro zone’s backing for its second bailout this week. If that backing now comes on Monday, it is possible the debt swap could start mid-next week.
After the three-hour conference call among the 17 euro zone ministers, Juncker issued a statement saying progress had been made, but provided few details. However, he made clear some matters remained open on making sure the bailout plan is carried out in full.
“Further considerations are necessary regarding the specific mechanisms to strengthen the surveillance of programme implementation and to ensure that priority is given to debt servicing,» he said.
One government official in Germany, where public opinion is hostile to bailing out Greece, was cautious.
“Questions remain that are very important to Germany and other member states about the sustainability of the programme,» said the official, who declined to be named.
German Finance Minister Wolfgang Schaeuble appeared to question whether Greece would stand by the austerity package after the elections.
“When you look at the internal political discussions in Greece and the opinion polls, then you have to ask who will really guarantee after the elections … that Greece will stand by what we are now agreeing with Greece,» he told SWR2 radio.
Greek President Karolos Papoulias, who holds a largely ceremonial role, fought back, saying: «Who is Mr Schaeuble to insult Greece?”