Greek deal signed

GREECE yesterday unveiled a political deal over budget cuts that should unlock a 130bn euro aid package and enable Athens to avoid a potentially catastrophic default next month.

After a week of fraught negotiations between the three parties that make up Lucas Papademos' coalition government, the Prime Minister's office yesterday confirmed that agreement on 3.3bn euro of new spending cuts had been secured.

Greece's financial backers in the European Union had said that they would not deliver the aid that Athens needs to redeem 14.4bn euro of its bonds next month unless the government committed itself to sweeping new austerity measures.

The cuts package, equal to around 1.5 per cent of Greece's GDP, will impose deep cuts in the minimum wage and will result in thousands of public sector job losses.

The announcement prompted a furious response from the Greek trade unions, who promised more protest strikes today and over the weekend. There was also a ministerial resignation in response to the cuts agreement.

The Deputy Labour Minister, Yannis Koutsoukos, a member of the socialist Pasok party, walked out of the government accusing Greece's foreign creditors of subjecting the country to "blackmail".

The financial markets reacted with relief to the news of the deal yesterday afternoon, sending stock markets and the value of the euro higher. But there are further political hurdles to be crossed before Athens secures its new funding.

Eurozone finance ministers need to approve the Greek budget package before they sign off on the 130bn euro bailout.

This was originally due to take place at a Euro Group meeting in Brussels last night, but ministers from Germany and the Netherlands said that they did not have sufficient detail to make their decision.

"We have come very far, but we are still not far enough," said the German Finance Minister, Wolfgang Schäuble.

The new aid agreement also needs to be given the nod by the German parliament, where some hardline Bundestag delegates have indicated that they will vote against a new bailout for Athens.

The German Chancellor, Angela Merkel, will meet the leaders of her parliamentary party today in an attempt to drum up support for the deal.

The Bundestag is expected to hold a vote on the subject next week.

Yesterday's agreement should clear the way for the agreement between Athens and its bondholders to be sealed.

This separate deal, which will see Greece's private sector bondholders take a 70 per cent reduction in the long-term value of their bonds, will give Athens around 100bn euro in debt relief, taking the country's debt to GDP ratio down to 120 per cent by the end of the decade.

There was also a strong hint from Mario Draghi yesterday that the European Central Bank (ECB) is preparing to play its part in reducing Greece's sovereign debt burden.

The ECB accumulated an estimated 55bn euro worth of Greek bonds at a deep discount in 2010 and 2011 when it was attempting to stabilise the eurozone's bond markets. If held to maturity, these bonds would deliver a profit for the ECB of around 15bn euro.

There have been suggestions in recent weeks that the ECB could transfer these securities to the European bailout fund, which could then transfer the profit to Greece, so Athens could reduce its debt burden.

At his monthly press conference in Frankfurt yesterday, Mr Draghi denied that this would represent a breach of the ECB's constitution, which proscribes direct lending to member states (or "monetary financing") by the central bank to governments.

"If the ECB gives money to governments, that's monetary financing. If the ECB distributes part of its profits to its member countries... that's not monetary financing," Mr Draghi told reporters.

Topics:  eurozone greece

Cudgen surf club trials eye in sky

KEEPING WATCH: The Little Ripper drones are being tested by surf life saving clubs to help keep swimmers and surfers safe.

High-tech drone to patrol surf as shark scares continue

Tweed voters to head to polls today

CASTING THEIR VOTE: Tweed voters will go to the polls today to elect their council representatives.

Crunch time in council election with count to start tonight

Local Partners

Greg and Christine find a new (gold) lease on life

Christine and Greg Clark star in the TV series Aussie Gold Hunters.

COUPLE reckons there’s nothing like finding your first gold nugget.

Miley Cyrus finally confirms engagement to Liam Hemsworth

Liam Hemsworth and Miley Cyrus.

Eccentric singer confirms long-held rumour

Former Oasis frontman threw popcorn at his brother

The Gallagher brothers have famously feuded for many years.

Oasis brothers still haven't made up

OUR SAY: Why musicians should be called 'tradies'

Should bands be paid every time they play? Journalist and musician Tom Gillespie thinks so.

We need to change the way we think about musicians.

The Kardashian sex tape has gone virtual reality

Vivid make Kim Kardashian West sex tape a virtual reality experience

Mariah Carey and James Packer discussing relationship

Mariah Carey and James Packer are discussing how to work things out

Want to own one of Australia's best restaurants?

TOP GONG: Mooloolaba Spice Bar has been named in TripAdvisor's Top 10 Australian restaurants for 2016.

Here's your chance to pick up one of the Coast's favourite eateries

Tough times in CBD: Woolies says goodbye Ipswich

Woolworths in the Ipswich Mall.Photo: Rob Williams / The Queensland Times

The last day of trading will be January 1

Look at me! Kath and Kim home up for sale

Kath and Kim from the iconic Aussie TV series.

'Crack open the Baileys and grab a box of BBQ Shapes'

How to fit 100,000 new homes on the Coast

Property, real estate, housing, suburb,  August 2016

Fitting 2m extra people in south-east Qld in 25 years a balance

Hinterland horse stud passed in for $8.25 million

UNREAL: This Maleny estate is incredible.

12-bedroom hinterland horse stud still available

Ready to SELL your property?

Post Your Ad Here!