Greece on 'knife edge' in last hours to agree bailout | business | Hindustan Times
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Greece on 'knife edge' in last hours to agree bailout

Greece's prime minister scrambled on Sunday to convince lenders and politicians to sign off on a €130 billion rescue, after the finance minister Evangelos Venizelos said just hours remain before the euro zone abandons the country to its fate.

business Updated: Feb 05, 2012 23:38 IST

Greece's prime minister scrambled on Sunday to convince lenders and politicians to sign off on a €130 billion rescue, after the finance minister Evangelos Venizelos said just hours remain before the euro zone abandons the country to its fate.

Prime Minister Lucas Papademos is trying to ensure cash-strapped Greece avoids sinking into a chaotic default when big bond redemptions come due next month.

Venizelos said Athens had only until Sunday night to clinch a second financing package from lenders, after euro zone ministers bluntly told him they were ready to abandon Greece without proof it could push through painful cuts.

"We are on a knife edge," Evangelos Venizelos said.

Papademos's first mission on Sunday is to agree at least a preliminary deal with the "troika" of foreign lenders on reforms included in the bailout, after several days of talks failed to resolve the thorny issue of cutting wages and spending.

Greek officials have emerged increasingly despondent after each round of talks, complaining that the European Central Bank (ECB), European Union (EU) and International Monetary Fund (IMF) troika were stubbornly refusing to yield on demands to cut the minimum wage level, axe holiday bonuses and fire public sector workers.

Papademos then faces an even tougher task convincing party chiefs in his own national unity coalition to back the reforms demanded by the lenders at the risk of ruining their chances at national elections expected in April.