Finance chiefs to talk after Greece falls into line

European finance chiefs get the second chance in a week to pull Greece back from the brink of collapse after lawmakers in Athens approved the austerity measures demanded for a financial lifeline.

Greece "will be saved in one way or another", German Finance Minister Wolfgang Schaeuble told newspaper Welt am Sonntag yesterday, though the country must "do its homework".

Euro-area finance ministers will convene in Brussels tomorrow for an extraordinary meeting called after they declined to ratify the €130 billion ($206 billion) package in a special session last week.

Frustrated after two years of missed budget targets, the European authorities demanded Greek officials put their verbal commitments into law.

The Greek Parliament passed the legislation in the early morning hours yesterday as rioters battled police and set fire to buildings in downtown Athens.

Still, Schaeuble told German lawmakers that Greece was set to miss deficit goals, suggesting that the measures may fall short.

"I'm really wondering now whether so much damage has been done that this marriage no longer can be rescued," Erik Nielsen, chief global economist at UniCredit SpA in London, wrote in a note to clients.

He predicted that the measures would be approved and that Greece will be able to make a €14.5 billion bond payment on March 20.

European finance ministers ended their meeting last week with Luxembourg's Jean-Claude Juncker saying Greece must turn budget cuts into law, flesh out €325 million in reductions and have major party leaders sign up to the programme so they don't retreat after elections as soon as April. Chancellor Angela Merkel plans to ask German lawmakers to vote on the next bailout on February 27, pending the terms for securing aid being met by Greece.

Other euro governments, including the Netherlands and Finland, have yet to schedule a date for parliamentary votes.

Schaeuble told legislators that plans would leave Greece's debt as high as 136 per cent of GDP by 2020.

That compares with the 120 per cent foreseen in the second bailout, down from about 160 per cent last year.

Schaeuble was briefing on estimates from the so-called troika of international creditors assessing Greece's programme.

Germany, as the largest contributor to euro-area bailouts, wants to see the latest report on Greece's record of implementing measures compiled by the troika of the European Commission, European Central Bank and International Monetary Fund before a majority can be mustered in Parliament, Economy Minister Philipp Roesler said yesterday on ARD television.

The Greek vote "was a necessary condition but implementation of these measures is what counts," Roesler said.

"We're waiting for the troika report on what progress Greece has made."

- Bloomberg

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