Greece: Partial Agreement Reached With Creditors

Feb 5, 2012
Originally published on February 5, 2012 10:27 am
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RACHEL MARTIN, HOST:

This is WEEKEND EDITION from NPR News. I'm Rachel Martin. The moment of truth has arrived for Greece. Today, the Greek government must finally reach agreement on the terms of a $170 billion bailout from the so-called troika - the European Commission, the European Central Bank and the International Monetary Fund. John Psaropoulos reports from Athens.

JOHN PSAROPOULOS, BYLINE: The Greek government declares that it has reached partial agreement with creditors. Finance Minister Evangelos Venizelos said there was agreement on how to refinance banks after a voluntary debt swap. Banks holdings some $260 billion in debt will accept new bonds worth less than half the old ones. But he made it clear that there was plenty of room for failure. Greece is fighting demands to reduce the minimum wage in the private sector, cut pensions and fire 150,000 public sector workers. The government argues that the new demands will deepen the recession, eat away at tax revenues and make it even harder to cut the deficit. It's time for policies that will bring growth, it says. Pay cuts and payroll cuts in the public sector have already helped shrink the economy by 13 points over three years. It won't return to growth this year or next and unemployment already stands at 19 percent. The political pressures on Greek leaders to resist reforms are enormous. An election expected in spring. The Socialists are set for a fall, but the conservatives are hoping to capitalize on their anti-austerity pro-growth agenda. The question is can it work if Greece goes bankrupt? The dilemma for voters will be whether the bailout cure is worse than the disease in debt. For NPR News, I'm John Psaropoulos in Athens. Transcript provided by NPR, Copyright NPR.