ATHENS, Greece, Feb. 6 (UPI) -- Greek politicians said they agreed to cut 15,000 government jobs in 2012, bringing them a step closer to qualifying for a $170 billion aid package.
The European Union, the European Central Bank and the International Monetary Fund, the so-called troika, has ordered Greece to pass an austerity budget to receive the next disbursement of international aid that would allow it to meet its debt obligations in March.
Investors have been fearing Greece would go into default, which might create such a hardship on banks that other nations, such as Italy and Spain, would fall into default as well.
Prime Minister Lucas Papademos had set Monday as the deadline for the leaders of Greece's national unity government to accept the troika's demands for immediate, deep spending cuts and labor reforms, state broadcaster ERT reported Sunday night.
On Sunday, Papademos and Antonis Samaras, of the New Democracy Party and George Karatzaferis of the People's Party, ended a five-hour session without any agreement on budget cuts that financial leaders have mandated, the Financial Times reported.
Papademos had said he would seek an agreement on austerity budgeting in principal, if not in detail.
Firing public sector workers in Greece is illegal, to the government will have to use attrition to subtract 15,000 jobs, the Times said. In response, unions in Greece have scheduled a 24-hour general strike for Tuesday to protest job and wage reductions.
Papademos also came up short in a meeting with financial leaders from the troika which refused to yield on its demands that Athens find $3.9 billion in spending cuts this year.
That amounts to cuts of 1.5 percent of the country's gross domestic product.
Greece, meanwhile, could be said to be dancing as fast as it can, but staying in one place. Greece's debt jumped to 159.1 percent of its gross domestic product in the third quarter last year from 138.8 percent in the third quarter of 2010, The New York Times reported.
Greece's economy is in its fifth year of recession. Some analysts fear repeated austerity measures are making it all the harder for the Greek economy to find a spark and return to growth.
The troika that organized the financial rescues of Greece, Ireland and Portugal said cuts and reforms were needed for Greece to quality for a needed $170 billion rescue package if it is to avoid default on a $19 billion bond repayment it otherwise can't pay March 20.
The troika's demands must be worked out this week for Greece to get the money in time to avoid a government default, which officials have said would have disastrous effects, spreading like a contagious disease to Portugal, Italy and possibly other countries.
Jean-Claude Juncker, head of the eurozone group of finance ministers, told Der Spiegel this weekend he had lost his patience with Greece.
If Athens does not "get muscles" and work things out in the next few days, "then there would not be a new program and that would mean that in March a declaration of bankruptcy would occur," he told the German weekly news magazine.
"If we were to establish that everything has gone wrong in Greece, there would be no new program and that would mean that in March they have to declare bankruptcy," Juncker said.
For the past two weeks, Greece has been locked in difficult negotiations with the international creditors on the loan terms, which include a range of unpopular reforms, including salary cuts for millions of workers already hit by unusually severe austerity measures.
The troika has demanded cross-party support for the reforms and austerity programs to ensure Greece doesn't backslide after a new government takes office in the spring.
But faced with growing discontent, the political leaders are disinclined to sign off on the demanded reforms, which they see as capable of sparking social upheaval, The Wall Street Journal reported.
Greece is also negotiating with private lenders and bondholders on a plan to swap old bonds for new ones at a considerably lower interest rate, saving Greece an estimated $130 billion in debt.
Private-sector creditors were reported willing to take a loss of more than 70 percent on their Greek government bonds, the Financial Times reported.
