Greek FinMin meets creditors over austerity bill

June 23, 2011 - 6:29 AM

ATHENS, Greece (AP) — Greece's new finance minister is meeting with a delegation of international creditors Thursday to put the finishing touches to a euro28 billion ($41.6 billion) austerity package that must be passed by Parliament next week if the country is to get its hands on crucial bailout funds.

Greece's creditors, particularly its partners in the 17-country eurozone, are demanding Greek lawmakers back fresh budget cuts and taxes in the austerity bill and an additional implementation law by the end of June. Only then will they approve the disbursement of the next batch of loans, worth euro12 billion, from Greece's euro110 billion bailout loans.

Without that money, Greece will face the real prospect of running out of money by the middle of July. A default by the country could drag down Greek and European banks, endanger the finances of other weak eurozone countries such as Portugal, Ireland and Spain, and spark financial uncertainty across world markets.

European officials are also discussing additional help for Greece in the form of a new bailout, as it has become increasingly clear the debt-ridden country will not be able to return to borrowing on international markets after the current rescue loans run out.

Evangelos Venizelos, who was appointed finance minister last week in a cabinet reshuffle following days of political turmoil, is meeting the heads of delegations from the European Commission, International Monetary Fund and European Central Bank, known as the troika, to discuss the final details to the two bills.

The midterm program is to be debated in Parliament on Monday and Tuesday, with a vote expected late Tuesday. The additional law comes up for discussion on Tuesday and must pass by June 30, the ministry said.

The outline of the extra austerity measures were announced earlier this month, but certain key details — such as lowering thresholds for income tax, certain tax hikes on consumer goods and property — were left out and are expected to be announced this week once the negotiations with the troika have ended.

The talks in Athens come as Prime Minister George Papandreou, who survived a confidence vote in his government Tuesday, heads to Brussels for a summit of European Union leaders. The Greek crisis is likely to feature heavily in discussions.

Papandreou still needs to convince several of his own Socialist lawmakers to support the austerity bill and the euro50 billion privatization drive. At least one deputy, Alexandros Athanasiades, has vowed to vote against them due to objections about selling off state assets.

The plans have led to widespread protests and strikes. Greeks faced more power cuts Thursday as workers at the electricity company continued 48-hour rolling strikes, objecting to the privatization of the power company.

Groups of protesters have been camping out in Athens' main Syntagma Square for the past month, with demonstrators swelling into the thousands every Sunday night.