Eurozone bail-out talks cancelled as Greece fails to agree €325m savings

TODAY’s planned meeting of eurozone finance ministers to settle Greece’s bail-out has had to be postponed after the Athens government failed to fulfil all the demands of the deal.

Jean-Claude Juncker, the prime minister of Luxembourg, said the Eurogroup was still missing information from Athens on how it plans to save a promised €325 million (£272m).

He said he also did not receive assurances from the leaders of the two main Greek parties that they will implement the programme even after elections expected for April.

He said the ministers will instead have a teleconference and meet next Monday.

Greece is under massive time pressure to secure a bail-out. It also needs approval for a separate debt relief deal with private creditors that has to be done by 20 March and needs several weeks to implement.

Political leaders in Athens, caught between sceptical euro-zone countries and a deeply angry population, had attempted to produce written commitments to stick to the terms of the €130 billion bail-out by today.

Greek politicians endorsed €3.3bn in cuts in wages, pensions and jobs on Sunday despite unrest in the capital.

But they failed to detail cuts worth €325m the European Union and International Monetary Fund (IMF) want clarified before they sign off on the bail-out.

Some of the money is expected to come from deeper cuts in the defence budget, said officials familiar with the talks. The bill passed on Sunday had already trimmed €300m from defence.There were encouraging signs from Austrian finance minister Maria Fekter who said she was “confident that – as far as I know the details – Greece will get more help”.

The European Central Bank (ECB) also said it could use profits from Greek bonds to help restructure debt. “They could use it to contribute to the sustainability of Greek debt,” ECB executive board member Benoît Coeuré said.

An Athens official said the Greek government had a proposal on the table and that prime minister Lucas Papademos would chair a session of the cabinet to discuss it.

Critics of the drastic belt-tightening measures warned that they were choking economic growth, with figures published yesterday showing that the Greek economy – which has been in a downturn since 2008 – remained stuck in a deep recession in the fourth quarter of 2011, with gross domestic product falling by 7 per cent in the three months to December.

Greece has been shut out of long-term debt markets since 2010, and is surviving on rescue loans from European Union countries and the IMF.

But harsh austerity measures demanded in return for the emergency loans have hammered the economy.

Yesterday, the Public Debt Management Agency said it had raised €1.3bn in an auction of 13-week treasury bills at a rate of 4.61 per cent – down from the 6.64 per cent rate from the previous sale of three-month debt on 17 January.

The austerity measures approved at the weekend sparked rioting in cities across Greece, with dozens of stores in Athens looted and burned. The National Confederation of Greek Commerce revealed that 153 businesses in Athens alone had been damaged, 45 of them destroyed – figures that were higher than initial police estimates.