Brussels, 24/11/2011 (Agence Europe) - Antonis Samaras, leader of the Greek conservative New Democracy Party, has finally given in. After refusing to do so for weeks, he sent a letter on Wednesday 23 November to the country's international lenders (the European Commission, the ECB and the IMF) expressing support for the second Greek bailout plan agreed at the eurozone summit on 26-27 October (see EUROPE 10483). The three biggest political parties, he said, have asked the government of Lucas Papademos to put into practice the decisions made at the European Council of 26 October and to implement the economic policies connected with those decisions.
In the letter, the New Democracy Party says it is firmly committed to the success of budget consolidation, structural reforms, restoring market confidence and encouraging economic growth, also backing the deficit and debt reduction targets and the measures already implemented, such as the cuts in public spending, structural reforms, privatisation programmes and clamping down on tax evasion. However, Samaras said that some policies had to be altered while remaining strictly within the Greek structural adjustment programme framework because setting taxes too high would only worsen the recession.
The letter should pave the way for the payment of the new instalment of aid for Greece (€8bn) so it can pay its bills and avoid bankruptcy in December. On Monday 28 November, the Eurogroup is expected to give the go-ahead for the European section of the aid. Athens' lenders have been demanding cross-party agreement on the austerity policy because they want to make sure that Greece will implement the eurozone summit decisions no matter who wins the general election in February. New Democracy is leading in the polls and did not want to suggest that it was reneging on its promise to renegotiate the austerity measures taken by the previous government as part of the aid deal.
Debt write-down. Meanwhile, the new Greek government is negotiating debt exchange (write-down) options with the private sector. Two proposals are on the table - the government is pushing for a slashing in the face-value of Greek bonds of around 60-65%, reinvesting the remainder in 15-20-year bonds and a cash payment) whereas the private sector wants a lower write-down (35-40%, reinvestment in 22-year bonds at rates of between 5.5% and 7.5%). The aim is to halve Greek bonds' value so that it falls to 120% of GDP by 2020. (MB transl.fl)