Bailout put on hold

EUROZONE finance ministers put a new Greek bailout on hold yesterday after Athens failed to meet conditions set by lenders in return for a rescue package it desperately needs to avoid default.

The eurozone had demanded that Greece's finance minister come to Brussels today with an extra à325-million in budget cuts and written pledges from politicians to implement EU-ordered austerity measures.

But Luxembourg Prime Minister Jean-Claude Juncker, head of the group of eurozone finance ministers, decided to switch the meeting to a conference call instead and prepare for previously scheduled talks in Brussels on Monday.

"I did not yet receive the required political assurances from the leaders of the Greek coalition parties on the implementation of the programme," Juncker said.

He also said "further technical work" was needed between Greece and EU and IMF auditors "in a number of areas," including finding the extra à325million of savings and finishing an analysis of the sustainability of Greece's debt.

Greece desperately needs the à230-billion rescue package - à130-billion in fresh loans and a à100-billion writedown on privately held bonds - to avoid defaulting on a à14.5-billion in debt owed on March 20.

The eurozone wants to ensure that the bailout deals will drastically reduce Greece's debt burden - from 160% of gross domestic product to 120% in 2020.

The EU, IMF and European Central Bank auditors have yet to provide ministries their report on debt sustainability owing to disagreements over how much the ECB should contribute to the writedown, said a source.

Another said there was a split between the ECB and the European Commission over whether the 120% target should be maintained or eased to 125%.

The enormous problems confronting Greece were illustrated by new data showing that the economy, in recession for a fifth year, shrank by 7% in the fourth quarter of 2011 compared with the same period a year earlier.

The Greek parliament approved à3.2-billion in cuts on Sunday despite protests and riots in the streets of Athens as Greek workers were hit by a 22% reduction in the minimum wage.

But eurozone partners, who no longer trust Athens after the country failed to live up to past promises, want a commitment to austerity in writing from politicians, who face an election in April.

Dutch Finance Minister Jan Kees de Jager had warned earlier that chances the Eurogroup would give final approval to the rescue were "low."