Greece rushes to nail down eurozone deal

22 Feb 2012, 9:47 am   -   Source: AAP

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Greece has rushed to finalise legislation tied to a huge eurozone bailout - tough reforms that mean a heavy workload and controversial constitutional changes.

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Greece has rushed to finalise legislation tied to a huge eurozone bailout, with officials warning tough reforms mean a heavy workload and controversial constitutional changes.

The program has to go through as the country prepares for elections in April which pollsters say could fail to produce a clear majority, clouding prospects for later implementation of the accord.

"A lot remains to be done, in the immediate future, to complete prior actions for the conclusion of the loan agreement expected in early March," Greek Prime Minister Lucas Papademos said after all-night talks in Brussels.

The government must work too to press ahead with "all reforms included in Greece's new economic program," Papademos said.

Eurozone finance ministers sealed an unprecedented deal early on Tuesday to provide a new 237 billion euros ($A295.29 billion) bailout designed to keep Greece in the single currency area.

Parliament will vote on Thursday on legislation to implement the deal, including a private creditor debt writedown, a Greek government source told AFP.

In the immediate term, the rescue package should be enough to avert a default on March 20 by enabling Greece to repay maturing debt worth 14.43 billion euros.

"We have only a few days ahead of us until the European Union summit (March 1-2) ... and we must do a lot of things in these few days. We must complete all the prior actions," Finance Minister Evangelos Venizelos told reporters.

"Greece is and will remain a eurozone member no matter what happens," Venizelos said.

A finance ministry source said the debt swap would be held on March 12 and the government hoped to get a least 66 per cent of private creditors to sign up to the deal.

It could then impose a Collective Action Clause (CAC) to force any hold-outs to accept it too, making sure it could go through in full.

Venizelos said rating agencies "might declare Greece in selective default" while the debt-swap operation was ongoing but "a selective default is only critical if the ECB (European Central Bank) and the eurozone consider it so".

"There is a full mechanism to cover liquidity in the meantime," he said.

As the leaders of the coalition backing Papademos's cabinet praised the deal as "satisfactory," others gave the accord a hostile reception.

Unions called for new protests on Wednesday as the head of the opposition Communist party vowed to fight the new austerity reforms.

"We insist on daily struggle to thwart the measures," said Communist party chief Aleka Papariga, "and this struggle cannot be a defensive one".

The deal provides Greece 130 billion euros in loans to 2014 alongside a 53.5 per cent writedown of privately-held Greek sovereign debt which should slash 107 billion euros from the country's debt mountain of 350 billion euros.

Charles Dallara, who heads the Institute of International Finance (IIF) which groups private creditor banks said the deal may not be a definitive turning-point for the eurozone but it was a move "toward a restoration of confidence in the eurozone".

Athens has until the end of the month to approve another batch of spending cuts of over three billion euros tied to the rescue and is called on to amend the constitution to ensure that priority goes to debt repayments.

A constitutional amendment requires a three-fifths majority in the present assembly, which Greece's two-party coalition government now has in hand.

But it must also be confirmed by a 151-seat majority in the new parliament that will emerge after April elections.

The conservative New Democracy party is expected to win the elections but will likely fall short of a parliamentary majority, while left-wing parties opposing the debt deal are touted to bolster their position.

Government spokesman Pantelis Kapsis told private Mega channel that the amendment was an "assurance demanded by the countries who lend us".

"I don't think it's something tragic," he said.

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