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Greece says it has cleared bailout hurdles

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Greece's Venizelos, right, defended his country from attacks by Germany's Schaeuble [AFP]Greek party leaders have met the final two demands set by the country's international lenders to seal a bailout, paving the way for a deal and an agreement to ease its debt burden to be announced on Monday.

Finance Minister Evangelos Venizelos told reporters late on Wednesday that 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 in return for the 130 billion euro rescue.

Likewise 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 serious rioting on the streets of Athens last Sunday.

Euro zone finance ministers in the Eurogroup had demanded both issues be settled before making a final decision on the bailout, Greece's second since 2010.

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 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.

After the teleconference, Jean-Claude Juncker, the Eurogroup chairperson, issued a statement saying progress had been, but provided few details.

He said the European Central Bank, IMF and European Commission had completed a report into Greece's debt sustainability - a precondition for approving the bailout – and that he expected the Eurogroup to be able to take the necessary decisions on Athens at the next meeting on Monday.

"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.

"On the basis of the elements that are currently on the table and the above-mentioned additional input, I am confident that the Eurogroup will be able to take all the necessary decisions on Monday 20 February."

Written assurance

One of the outstanding issues had been a written commitment from Antonis Samaras, the leader of Greece's opposition conservative party, that he will stick to the agreed programme if he wins elections expected in April.

Samaras, who is ahead in the polls and widely tipped to be Greece's next leader, delivered that letter on Wednesday.

"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 he insisted the fast-shrinking Greek economy must also be kickstarted into life and reserved the right to adapt details of the package accordingly - a hedge that could prove a sticking point for increasingly frustrated euro zone partners.

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-bn-euros in debt repayments. It was hoping to have the euro zone's backing for its second bailout this week. If that backing comes on Monday, it's possible the debt swap could now start in the middle of next week.

Venizelos earlier insisted there were "only a few remaining issues" to be resolved on the package of wage, pension and public sector job cuts lashed out at Greece's doubters.

"There are now powers in Europe who are obviously playing with fire because they believe ... that not all requirements will be met, and who may even want Greece out of the eurozone," he told reporters in Athens.

Rioters torched buildings across Athens late on Sunday as Greek lawmakers passed the austerity bill, of which around 325 million euros of cuts still need to be identified.

But after a series of broken promises since Athens was first bailed out in May 2010, trust is in short supply.

"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," Wolfgang Schaeuble, the German finance minister told SWR2 radio.

Greece's President Karolos Papoulias, who holds a largely ceremonial role, fought back, saying in a speech: "Who is Mr Schaeuble to insult Greece? Who are the Dutch? Who are the Finnish?"

Greece is well on its way to suffering one of the biggest slumps of modern history. Output has contracted 16 per cent from its peak in 2008 and the cuts will inevitably make that worse.


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