Greek talks for debt deal continue, no signs of breakthrough

Parties backing Greece's coalition government will hold a second day of emergency talks on Monday on a vital 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 in the afternoon 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, but their backing is needed for the government to reach a deal for the bailout, which must be approved by the Greek Parliament.

The new euro 130 billion ($171 billion) bailout deal is vital for Greece to avoid bankruptcy next month as it cannot cover a euro 14.5 billion ($19.1 billion) bond repayment due March 20 without the rescue funds.

The debt-crippled country has been kept solvent since May 2010 by payments from a euro 110 billion ($145 billion) 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 the austerity measures but also on separate talks with banks and other private bondholders to forgive euro 100 billion ($131.6 billion) 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 more talks in Athens with EU-IMF debt inspectors, senior bank negotiators, and Greek political party leaders, to try and hammer out a deal on the new cutbacks.

Greeks have already been subjected to 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 labor 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 the AP.

An ADEDY statement said the proposed new cutbacks would "intensify the vicious cycle of recession and drive Greek society to despair."

Greece is in its fifth year of recession, while unemployment has hit record highs of about 19 per cent.

"The current policy of austerity ... is turning workers into pariahs, jobless people and pensioners into paupers and deprives our youth of any hope," the statement said. "This policy has already pushed Greeks beyond their limits and must be stopped at any cost."

An announcement from Papademos' office late on Sunday said agreement had been reached to cut 2012 spending by 1.5 per cent of gross domestic product - about euro 3.3 billion ($4.3 billion) - improve competitiveness by slashing wages and non-wage costs, and re-capitalize banks without nationalizing 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.

Rescue lenders are also seeking firings in Greece's large public sector, a drop in the euro 750 ($985) gross minimum monthly wage, and cuts in lump-sum retirement payouts, as part of a long list of cost-cutting demands.