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Fresh doubts over Greek bailout plan

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Greece's GDP fell by seven per cent in the fourth quarter of 2011 under the weight of austerity Greece's coalition leaders sent written reform guarantees to European officials, a condition demanded for the release of new bankruptcy-saving loans, their respective parties said.

In his letter, Antonis Samaras, the conservative leader, said his party would "remain committed to the objectives, targets and key policies" described in the economic recovery programme agreed with the EU, International Monetary Fund and the European Central Bank if it wins snap elections expected in April.

George Papandreou, the Socialist leader and former prime minister, had previously sent his own pledge, his party said. 
 
However, Samaras - a long-term opponent of the EU-IMF loan agreement signed by then premier Papandreou in May 2010 - said that "policy modifications might be required" to guarantee the programme's full implementations, notably as regards growth.
 
"We intend to bring these issues to discussion along with viable policy alternatives, strictly within the framework outlined by the program, so that the achievement of its objectives will not be put at risk," Samaras said in the letter sent to the EU, the Eurogroup of finance ministers, the IMF and ECB.

Samaras' New Democracy party, which is widely tipped to return to power in April, has strongly criticised the EU-IMF blueprint as excessively focused on tax increases and pay cuts which have stymied growth after two years of austerity effort.
 
In a symbolic move aimed, Karolos Papoulias, the president, will give up his salary to help in the country's debt crisis.
 
Greece under pressure

Evangelos Venizelos, the Greek finance minister, announced the news on Wednesday.

"It is a gesture that honours the president. It's a symbolic gesture at a moment like this when the Greek people make such sacrifices," he said.

The news of the letter came after European finance ministers cancelled a meeting to discuss Greece's second bailout earlier in the day, creating further uncertainty over Greece's commitment to austerity reforms demanded by its creditors.
 
Jean-Claude Juncker, the prime minister of Luxembourg, who heads the Eurogroup of eurozone finance ministers, said Wednesday's meeting had been replaced by a conference call because Greece had failed to meet all the conditions needed in order to receive its next rescue loan.
 
Juncker said the group had not yet received assurances from Greek political leaders over their commitment to cuts, despite the measures being passed by the country's parliament.
 
He said Greece had also still to detail how it planned to cover a budget gap of $428m.
 
Jan Kees de Jager, the Dutch finance minister, said: "We should have everything clear on paper. We don't give an inch. We want everything, a complete package."
 
Greece needs access to the 130bn-euro loan ($170bn) in order to avoid defaulting on its debts next month, when it is due to pay out 14.5bn euros ($19bn) in redeemed government bonds.
 
But Greek political leaders have continued to rail against the stern measures demanded in return for the bailout.
 
Christos Papoutisis, the country's public order minister, said: "Greece has made all the efforts that it needed to do, and the people cannot take any more. The government is making superhuman efforts and we have reached the limits of the social and economic system."
 
'Playing with fire'
 
In comments reported by the Financial Times, Venizelos said: "In the euro area, there are plenty who don't want us anymore."

The paper quoted him as saying on Wednesday: "There are some playing with fire, domestically and abroad."

German officials stressed on Wednesday they wanted to do everything to keep Greece in the eurozone but said some assurances they sought that reforms would be undertaken were still missing.

Steffen Seibert, spokesman for Chancellor Angela Merkel, vigorously denied market rumours that Germany was happy to let Greece go bankrupt and leave the 17-nation eurozone.

"I can clearly state for the federal government that these rumours are false. There has not been such a decision from Germany," Seibert told a regular government briefing.


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