Greece held its breath for emergency political talks to clinch consensus on tough new economic reforms on Friday, under the gun of an IMF debt ultimatum and a looming risk of bankruptcy.
The talks called by Greek President Carolos Papoulias began shortly before mid-day amid reports of a possible cabinet reshuffle and with the IMF likely to withhold a vital instalment of urgently needed rescue money.
The opposition parties have mostly refused to support the government in its quest to cut spending by trimming the overblown civil service, and a sweeping privatisation drive announced this week has attracted even stronger protests.
Many voices in financial markets have warned that the Greek crisis, the second in 12 months, could send shock waves through the eurozone, and mainly through Ireland and Greece, particularly if existing Greek debt were restructured.
Greek media appealed for consensus on Friday.
"Time to get serious," said liberal Kathimerini daily.
Under pressure from its creditors at the EU and IMF, the government is trying to raise 50 billion euros ($71 billion) from a sale of state assets including Balkans telecoms giant OTE and near-monopoly electricity firm PPC.
OTE unionists on Friday blocked a key Athens highway in protest at the planned sale of the state's 16-percent stake and pledged to maintain the fight.
"We will continue the struggle with occupations and strikes," chief OTE unionist Panagiotis Koutras told reporters. "We are not surrendering."
Mobilisations have also begun at other state companies slated for sale such as the Piraeus port authority (OLP), Hellenic Postbank and the Thessaloniki water company, and unions are also preparing a general strike.
Meanwhile the European Union is divided over containing debt strains in the eurozone, mainly because of the Greek crisis.
International Monetary Fund spokeswoman Caroline Atkinson warned late on Thursday that the fund needed "assurances" on how Greece will pay its bills.
The IMF had to have 12-month visibility that it would get its money back, she said. This was a condition of continuing to provide its share of a 110-billion-euro ($156-billion) loan mainly backed by EU nations.
"Our Executive Board does not ever let us lend when we don't have an assurance ... when we haven't assured ourselves that there will be no gap," she told reporters in Washington.
Atkinson stressed that the IMF's total 30-billion-euro loan package for Greece depended on the country being able to obtain financing from other sources and operations.
On Thursday, Luxembourg Prime Minister Jean-Claude Juncker, who heads the eurozone finance ministers, also warned that the IMF may block the next instalment of the joint rescue money.
A quarterly audit of Greek finances by the IMF, EU and European Central Bank is heading into an unprecedented fourth week and has yet to approve the release of a fifth loan instalment worth 12 billion euros. They are concerned that Greece has fallen behind its promised programme of reforms.
"For sure, the ongoing mission of the troika in Athens looks set to undergo increasing pressure for a quicker assessment of the Greek package. Euro/dollar volatility is here to stay," ING analyst Paolo Pizzoli said in a note.
Greece will "most likely" go bankrupt without this money, Prime Minister George Papandreou admitted in a Sunday interview.
Greece needs the loan this month and the government has warned that its reserves run out in July.
"No wages, pensions or state obligations will be paid out (without this money)," Finance Minister George Papaconstantinou told Skai television on Monday.
Reports here say Papandreou could reshuffle his cabinet and add technocrats to help reach a consensus.
Warning bells on Greece's dire economic straits have also sounded in the European Union.
Last week the ECB, which is providing funds constantly to keep the Greek banking system afloat with liquidity, warned that if existing Greek debt were restructured in any way, it may stop this lifeline.
AFP
