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Greece reaches deal on austerity measures

Tough measures are needed to win a new bailout

Thanassis Stavrakis/Associated Press

Protesters in Athens yesterday carried a banner that reads “unions.’’ They oppose further deep cuts.

ATHENS - After days of maneuvering, Greek political leaders reached a tentative deal yesterday on tough austerity measures demanded by Greece’s financial backers in return for the country’s latest bailout.

The deal was intended to unlock $173 billion in new loans and save Greece from a potentially disastrous default. But there was no immediate flurry of checkbooks opening, as the country’s lenders sought to determine that all conditions had been met.

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Heading into a meeting of eurozone leaders last night in Brussels, the Greek finance minister, Evangelos Venizelos, described the deal as a “new, strong and credible program.’’ He said it had been reached at “staff level’’ with the so-called troika of lenders - the European Commission, the International Monetary Fund, and the European Central Bank.

“We also have an agreement with private creditors on the basic parameters’’ of a debt write-down, Venizelos said. “Now we need the political endorsement of the euro group for the final step.’’

But ahead of the same meeting, Germany’s finance minister, Wolfgang Schauble, indicated the endorsement would take time. He said there were still “general requirements’’ outstanding, including approval by the Greek Parliament.

Nevertheless, officials and diplomats were hoping to get enough of a conditional agreement so as to be able to start the process of the accompanying bond swap for Greece. That decision is urgent because the procedures are complex and there is a tight deadline if a Greek default is to be avoided.

Prime Minister Lucas D. Papademos and the leaders of the three political parties backing his coalition had agreed on a range of steep wage cuts and public-sector layoffs, but their talks stalled early yesterday over the thorny issue of pension cuts, leaving a shortfall in required savings. But later in the day, the government said the leaders had overcome that hurdle by trimming defense spending and other expenditures.

Parliament has scheduled a vote on the final package for Sunday.

Once the deal is approved, the lenders are expected to begin releasing to Greece the aid it needs to prevent a default when its next debt payment comes due on March 20. Before that, however, officials want to complete a bond swap under which private investors would take losses of as much as 70 percent.

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