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Eurozone Finance Ministers To Vote On Greek Bailout Package

A woman waves a Greek flag during an anti-austerity rally in front of the parliament in Athens on February 19.
Eurozone finance ministers are meeting in Brussels to vote on a 130 billion-euro financial bailout package for Greece, the second such bailout package for that country in less than two years.

The latest effort aims to prevent a Greek debt default on March 20, when bond repayments of 14.5 billion euros come due. It is part of an overall bailout that that would write off 100 billion euros of debt and provide loans to Athens worth 130 billion euros.

Greece is unable to pay off or service its debts on its own, and a default on its March 20 bond repayments could have devastating consequences for the euro currency and trigger havoc in the global economy.

French Finance Minister Francois Baroin expressed optimism in the hours ahead of the Brussels meeting, saying European Union ministers have "all the elements for an accord" on the larger, overall bailout package for greece.

"We now have all the elements for an agreement, including a voluntary participation by the bankers, the private creditors, as well as by the public creditors: the states, the central banks," Baroin said.

His remarks follow a report by "The Wall Street Journal" that the International Monetary Fund (IMF) plans to contribute 13 billion euros as part of a new international bailout package for Athens.

The Greek parliament has already approved a series of austerity measures worth 3.2 billion euros, along with reforms aimed at getting its economy back on track, as a precondition for the bailout.

But the austerity measures are deeply unpopular in Greece -- prompting an outbreak of violent street demonstrations in Athens, including on February 19.

U.S. Treasury Secretary Timothy Geithner threw Washington's support behind the new austerity measures agreed by Greece, saying the United States backs the idea of a new IMF loan for Athens.

But there also are concerns among the richer eurozone countries about whether future governments in Athens would continue to enforce the austerity measures that are part of the deal for a second bailout package.

Germany has called for Greece to set up a separately managed account to ensure that it services its debt even if there is a future change of government.

Critics say that requirement would be an unprecedented intrusion into a sovereign state's fiscal affairs.

Baroin, the French finance minister, said the special escrow account to earmark funds for Greece's debt servicing would help give confidence to investors. But he said the priority is to prevent a Greek debt default.

Also at stake in the Brussels vote is the fate of the accord between Athens and its private creditors -- private banks and financial institutions -- that involves the unprecedented write-down of Greek debt.

The so-called Private Sector Involvement talks are debt restructuring negotiations under which private creditors would accept a cut of at least 50 percent of the 200 billion euros in Greek debt they hold, as well as considerably longer repayment schedules. Greece's debt totals some 350 billion euros.

Ahead of the February 20 vote, an executive board member of the European Central Bank, Joerg Asmussen, sought to downplay concerns about the global impact of a Greek debt default, saying in a newspaper interview that "Greece is no threat to the world economy."

Compiled from agency reports

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