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Euro Ministers Edge Closer To Bail-Out Deal For Greece

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Jean-Claude Juncker (right) speaks with Greek Prime Minister Lucas Papademos in Brussels
Jean-Claude Juncker (right) speaks with Greek Prime Minister Lucas Papademos in Brussels

Haggling over the final terms for another Greek bail-out was keeping eurozone ministers at the negotiating table in Brussels late on Monday night.

Germany, France, and the chairman of the talks, Jean-Claude Juncker, all indicated a deal was close after months of wrangling over whether Athens qualifies for a second massive financial rescue package from the EU and IMF.

The struggling Greek economy received €110 billion (£91bn) in 2010 but it was not enough to lift Greece out of crisis.

Now, with strict austerity strings attached, another €130 billion (£110bn) lifeline looks set to get the go-ahead within weeks of an impending Greek debt default.

German finance minister Wolfgang Schauble - who last week indicated willingness to let Greece leave the eurozone - said he was now "confident" of a deal on a new aid programme while his French counterpart said all necessary elements of an accord were in place.

Juncker, Luxembourg's prime minister and chairman of the eurozone nations, said he hoped Monday night's meeting would be the "final consultations" before approving the deal.

Greek finance minister Evangelos Venizelos declared that his government had "fulfilled all the requirements for the approval of the new programme", but acknowledged: "Until the very last moment, the negotiation carries on. Technical problems are being discussed, individual parameters are being examined and preferences or priorities of institutional partners or member-states are affecting the mood of the talks."

A Greek austerity package of severe pay, pensions and jobs cuts as a bail-put condition is in place, and the Greek government has found €325m (£270m) of extra, immediate savings in this year's national budget.

Written pledges from most of the key Greek political parties that the austerity measures will be honoured even after a change of government are also in place.

But late on Monday the ministers were still arguing over Dutch pressure for some "permanent" EU, IMF and European Central Bank involvement in future Greek tax and spending plans to ensure the austerity plan does not waiver.

And ministers were still trying to juggle the financial figures to get Greece closer to a target of reducing its debt level - a huge 160% of Greek national wealth - to a more sustainable 120% of GDP by 2020.

With the debt reduction target date eight years away, some officials said it would be impossible to work out an accurate calculation now for the Greek economy to guarantee delivery of a 120% goal by 2020.

If a deal goes through, Greece's private creditors would take a loss of as much as 70% on what they are owed by Athens - a sacrificial "haircut" that would amount to a debt write-off worth €100 billion (£84 billion) to help the Greek economy get back on its feet.

Despite growing threats of some frustrated member states being ready to accept an "orderly default" from Greece, all signs were of a major effort to clinch a deal to keep Greece inside the euro, as much to avoid the political, as well as economic, fallout from the loss of a eurozone member.

Failure to complete a deal would still not be the end of the line: an EU leaders' summit is scheduled next week, and Greece has until 20 March to meet its next - relatively modest - debt repayment of €14.5 billion (£12 billion).

But Juncker indicated that another delay would be too close for comfort: "I am of the opinion that today we have to deliver, because we don't have any more time."

Unusually, Greek prime minister Lucas Papademos was on hand at an EU finance ministers' meeting, ready to tackle any final obstacles to a deal which would get Greece back on economic track - albeit in the face of continuing violent public protests at the scale of belt-tightening Greek citizens are being asked to endure.