Parties backing Greece’s coalition government will hold a second day of emergency talks on an austerity deal with rescue creditors, after an intense weekend of negotiations failed to produce a breakthrough needed to avert bankruptcy in March.
Prime Minister Lucas Papademos will meet with negotiators from the eurozone and the International Monetary Fund and then with the leaders of the three parties backing his coalition.
The parties all publicly oppose steep cuts in private sector pay demanded by the eurozone and IMF.
The new 130 billion euro($A160 billion) bailout deal is vital for Greece to avoid bankruptcy next month as it cannot cover a 14.5 billion euro bond repayment due on March 20 without the rescue funds.
The debt-crippled country has been kept solvent since May 2010 by payments from a 110 billion euro international rescue loan package.
When it became clear the money would not be enough, a second bailout was decided last October.
Its implementation depends on Greece’s progress in separate talks with banks and other private bondholders to forgive 100 billion euros in Greek debt, in exchange for a cash payment and new bonds with more lenient repayment terms.
Over the weekend, Greek officials held a conference call with eurozone finance ministers, as well as exhaustive rounds of talks in Athens with EU-IMF debt inspectors, senior bank negotiators, and Greek political party leaders, to try and hammer out a deal.
Greeks have already had a spate of austerity measures in return for the rescue loans, suffering significant cuts in pensions and salaries coupled with repeated tax hikes and an increase in retirement ages.
Angry at the prospect of new pain after two years of harsh austerity, Greece’s main GSEE labour union and the ADEDY civil servants’ union called a new general strike for Tuesday.
“Together with the GSEE, we have just decided to hold a 24-hour strike tomorrow, to be accompanied by a protest march in central Athens,” ADEDY secretary-general Ilias Iliopoulos told AP.
An announcement from Papademos’ office late Sunday said agreement had been reached to cut 2012 spending by 1.5 per cent of gross domestic product – about 3.3 billion euros, improve competitiveness by slashing wages and non-wage costs, and re-capitalise banks without nationalising them.
But the three coalition backers – Socialist George Papandreou, Conservative Antonis Samaras and George Karatzaferis of the rightwing populist LAOS party – differed as to what this would mean in detailed proposals.
Party leaders had undertaken to provide an initial response on the demanded cutbacks before their Monday evening meeting with Papademos, a Socialist party spokesman said.
However, the prime minister’s office said there was no formal demand for a response, while the conservatives and LAOS said they were not planning to issue one.
“We are in the middle of a major struggle. Right now, the developments are satisfactory,” said Karatzaferis.
He added that EU-IMF negotiators had backed away from a demand to axe annual salary instalments given to Greek workers as holiday bonuses.
Rescue lenders are also seeking firings in Greece’s large public sector, a drop in the 750 euro gross minimum monthly wage, and cuts in lump-sum retirement payouts, as part of a long list of cost-cutting demands.
Unions and employers’ associations oppose the wage cuts, arguing it would worsen a recession in its fourth year and increase unemployment, already at around 19 percent.
Also on Monday, left wing opposition parties are planning two separate protest rallies in central Athens at 6:00 pm (0500 AEDT), against the proposed cuts.