Athens agrees to $14.1B in austerity cuts

Aug. 2, 2012 at 3:30 AM
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ATHENS, Greece, Aug. 2 (UPI) -- Greece agreed to $14.1 billion in fresh austerity measures, paving the way for it to secure direly needed funding from international creditors, officials said.

The 6-week-old coalition government plans to hold talks on the cuts with international lenders, who must agree to the austerity package before approving the next aid installment from a $212 billion bailout, the officials said.

If it doesn't get the money in the next few weeks, Athens will likely not be able to meet its commitments, Deputy Finance Minister Christos Staikouras said Tuesday.

"Cash reserves are almost at zero. It's not possible to say how long they will last because that depends on the budget execution, but we are close to the brink," he told state-owned New Hellenic Television.

The looming cash crunch means Greece may have to raise an extra $4 billion in treasury bills this month to cover a repayment due Aug. 20 on a bond held by the European Central Bank, the Financial Times reported.

Finance Minister Yannis Stournaras told reporters Wednesday Prime Minister Antonis Samaras of the conservative New Democracy party was able to persuade Panhellenic Socialist Movement party chief Evangelos Venizelos and Democratic Left party leader Fotis Kouvelis to implement the $14.1 billion in cuts over two years.

Venizelos and Kouvelis, representing Greece's two junior coalition partners, had pushed during the nearly 3-hour meeting for the cuts to be spread over four years.

Venizelos told reporters he set aside his demand in the interest of the country and to avoid bringing down the tenuous coalition government.

"We will now begin negotiations with the troika," Stournaras said, referring to Greece's international lenders -- the European Commission, European Central Bank and the International Monetary Fund.

Details of the spending cuts will be made public by the end of the month, he said.

Greece's split Parliament will be asked to approve the unpopular cuts next month, amid an increasingly powerful leftist opposition and a growing backlash from an austerity-weary public, The Wall Street Journal reported.

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