11-Feb-2012 - Greek Deal Faces Scrutiny

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By MATTHEW DALTON And ALKMAN GRANITSAS BRUSSELS—Euro-zone finance ministers gathered here on Thursday to review a new Greek political accord on budget austerity and the details of a planned debt restructuring aimed at slashing the country's debt burden to private creditors by €100 billion (132.6 billion). After all-night talks, Greek Prime Minister Lucas Papademos announced a deal nfl jerseys cheap Thursday among the main political parties to cut more than €3 billion in government spending, slash the minimum wage by 22% and cut pension benefits. The deal is the price of a new bailout and debt deal that aim to reduce Greece's debt to 120% of gross domestic product by 2020—still high, but a burden officials say the Greek government should be able to bear. The ministers and the International Monetary Fund must ensure the numbers add up before approving a second bailout for Greece valued at €130 billion. That means a final decision on the second loan program isn't likely at the Brussels meeting, ministers said. "We want to see real implementation of the measures needed by the Greek government and also full commitment of all leaders in Greece for future measures," said Dutch Finance Minister Jan Kees de Jager. The plan includes a bond swap between the government and its private-sector creditors that needs to be put in motion soon. A €14.5 billion bond repayment looms March 20; without the bailout in hand, Greece will default on its debt, with potentially catastrophic effects on euro-zone government-bond markets. The "basic parameters" of the exchange deal have been set, Greek Finance Minister Evangelos Venizelos said Thursday. But the final steps needed "the political endorsement from" euro-zone finance ministers, he said. Some of crucial details are missing, including exactly how the European Central Bank will participate in the deal. The ECB holds an estimated €45 billion or more of Greek government bonds, which it bought at prices substantially below face value, and European officials said the bank had agreed in principle to sell those bonds at below-par prices. In a news conference after the ECB's monthly meeting Thursday, ECB President Mario Draghi said the ECB is prohibited from giving direct financial aid to governments. But he said giving up profits it would make if the bonds were paid in full wouldn't break the rules. "If the ECB distributes part of its profits to its member countries as part nfl jersey supply of the capital key that's not monetary financing," he said. German Finance Minister Wolfgang Schäuble, meanwhile, said he is confident Greece will meet a timetable to complete its negotiations on a debt restructuring and its talks with the euro zone on a second bailout in time. But he said he didn't expect ministers to sign off on a new bailout package at Thursday's meeting in Brussels. "I'm confident the timetable can be met. It's all down to Greece, [but] these are not simple decisions," he said. "I don't think we'll come to any results [Thursday night]. The negotiations have made progress but we're not there yet." Even if Greece avoids a disorderly default, years of sharp spending cuts and tax increases are having devastating effects on the Greek economy. Greece's unemployment rate soared in November to 20.9%, compared with an 18.2% rate just a month earlier and up sharply from one year ago, Elstat, the government statistics agency, reported Thursday. The total number of unemployed reached 1.029 million, up 126,062 from October, Elstat said. The Greek labor market is deteriorating with alarming speed: In November, the European Commission predicted Greek unemployment would average 18.4% this year. Greek industrial output fell 11.3% in December compared with the year-earlier month, after falling 7.8% in November, the government also reported on Thursday. Austerity measures introduced since May 2010 as part of a €110 billion bailout plan have taken a heavy toll on the economy, leading to Greece's fifth year of economic recession in 2012. The new cuts backed by Greek political leaders have the country's unions up in arms. Greece's public and private-sector umbrella unions on Thursday called a 48-hour general strike to protest the measures, following protests by thousands of workers earlier this week. With demand for Greek exports dropping in the last quarter of 2011 and domestic political turmoil in October and November damaging confidence, economists Reebok NFL jerseys say deteriorating economic conditions hit the job market in the last few months of the year. —Matina Stevis, Geoffrey T. Smith and Brian Blackstone contributed to this article.

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