Hopes rose today that Greece had finally done enough to secure a second bail-out package worth €130 billion after the country set out extra budget savings demanded by its international lenders.
Time is running out for Greece to secure the new funds to ensure it can avoid a chaotic default when €14.5 billion of debt repayments fall due on March 20.
The optimism came amid a mood of deepening acrimony between Greece and some euro zone states and came only after one proposal to withhold part of the bail-out until after Greek elections in April had been dropped. "We are almost there," one euro zone official said.
"Unless someone really comes up with an idea to undermine the whole deal, it should be approved on Monday," the official said of a regular meeting of the euro zone's finance ministers in Brussels.
In a further sign of an emerging accord, euro zone sources said national central banks in the euro zone would this weekend exchange holdings of Greek bonds in the run-up to a private sector debt deal to avoid taking forced losses.
With a go-ahead from the euro zone finance ministers, Greece can formally launch a debt restructuring offer to its private creditors which aims to halve in nominal terms what Greece owes to investors, slashing its debts by €100 billion.
"There is no certainty but there is cautious optimism," said Antonis Samaras, leader of Greece's conservative New Democrats and the favourite to win the elections, told reporters. "Greece has done what it had to do."
A Greek government spokesman confirmed that Athens expected to get the green light from the euro zone on Monday for the debt swap deal with banks and insurers.
Greece has provoked rising frustration among some euro zone members at what they see as a trend of Greek political leaders doing the minimum possible at the last moment since the country was first bailed out in 2010. Critics say exactly the same applies to the euro zone's response over the last two years.
Greek government sources said Athens had agreed with the EU and IMF how to fill a €325m hole in a set of €3.3 billion in budget cuts adopted by parliament on Monday as rioters torched and looted buildings in the capital.
Some points remain unresolved. The Greek government spokesman said the issue of an escrow account to ringfence funds for debt redemption payments had not been agreed, while a German coalition source said more work was needed on how to monitor Greece's efforts to cut spending.
Euro zone finance ministers will also have to consider on Monday the implications of a Greek debt sustainability report prepared by the European Commission, the European Central Bank and the International Monetary Fund which shows Greek debt in 2020 would be around 129% of GDP, well above a target of 120% set in October.
Frustration exploded yesterday as Greek President Karolos Papoulias lashed out at German finance minister Wolfgang Schauble. Schauble, who has likened Greece to a "a bottomless pit", expressed doubt on whether Athens would stick to new promises adopted by parliament on Monday.
"I cannot accept Mr Schauble insulting my country," Papoulias riposted. "Who is Mr Schaeuble to insult Greece? Who are the Dutch? Who are the Finnish?"
Greek party won't commit to measures
Greece's far-right LAOS party said this evening it would not commit to support a package of austerity measures sought in exchange for an EU/IMF bail-out package.
Earlier, a German coalition source told Reuters that euro zone countries wanted LAOS to confirm that it would back the measures after an election which could come in April, and which polls show could bring the New Democracy conservatives to power but without an absolute majority.
"There is no way," the party's parliamentary group leader Alexandros Chrysanthakopoulos told Reuters, when asked whether the party could make such a commitment.
The party withdrew from the cabinet of Prime Minister Lucas Papademos in protest at the package of welfare and labour cuts and most of its deputies walked out of parliament before the reform was passed in a vote early on Monday.
Another LAOS party official said it had not been informed that the Eurogroup of euro zone officials wanted them to commit to the package in the same way that the two remaining parties in the coalition have this week.
