Austerity plan debate begins in Athens

Fall deadline set for bailout deal

June 28, 2011|By Elena Becatoros, Associated Press

A Communist trade union protested yesterday atop the Acropolis archeological… (LOUISA GOULIAMAKI/AFP/Getty…)

ATHENS — Greece wants to conclude negotiations for a second bailout by the end of the summer “at the latest,’’ the country’s new finance minister said yesterday at the start of a parliamentary debate on unpopular but crucial austerity measures.

A new $40 billion Greek austerity package and implementation law must be passed in parliamentary votes this week so the European Union and the International Monetary Fund will release the next installment of Greece’s $156 billion bailout loan.

Without it, Greece faces the prospect next month of becoming the first eurozone country to default on its debts — a potentially disastrous event that could drag down European banks and affect other financially troubled European countries.

Finance Minister Evangelos Venizelos, who only assumed the post in a June 17 Cabinet reshuffle, said the $17 billion installment would cover the country’s borrowing needs until mid-September.

“And between now and the end of the summer at the latest, we must seriously negotiate the new program with our partner — the European Commission, the European Central Bank, and the IMF — and guarantee viability of the national debt with the participation of private investors internationally,’’ Venizelos said.

It has become clear that the initial bailout from May 2010 is not enough to pull Greece out of its financial crisis. The country’s international creditors are now discussing a second bailout, which Prime Minister George Papandreou has said it would be roughly the same size as the first.

Venizelos urged Greek opposition parties yesterday to back the government in negotiations with international creditors.

The main opposition leader, the conservative New Democracy party’s Antonis Samaras, has so far resisted intense European pressure to back the austerity bill. While Samaras supports cost-cutting measures and the sale of some government assets, he said tax rates should be lowered rather than raised to stimulate an economy in recession.

Parliament is to vote on the austerity bill tomorrow.