Greece must prove itself on world stage, says minister

Greece must unite behind its austerity plan to secure a stronger bargaining position on the world financial stage, its finance minister said today but his deputy cast doubt on important privatization targets. Euro zone finance ministers completed talks in Brussels yesterday promising cheaper loans, longer maturities and a more flexible rescue fund to help Greece and other EU debtors and stop financial contagion.

But at the same time they acknowledged for the first time that some form of default may be needed to cut Greece's huge debt burden and secure economic recovery. The government has committed to austerity measures to secure rescue funds.

"We must implement the programme in a climate of national unity and social cohesion, it is a prerequisite for a stronger bargaining position," Finance Minister Evangelos Venizelos said, underlining his calls for political consensus in a statement issued after the Eurogroup talks in Brussels.

Athens needs a second bailout package to take it through to mid-2014 as it faces a funding gap next year under its current EU/IMF rescue deal and is highly unlikely to be able to return to bond markets in 2012.

Its hopes for extended funding were kept alive after the socialist government passed a tough package of budget cuts, taxes, privatizations and structural reforms to stop generating deficits and make the 230-billion-euro economy more competitive, amidst stiff political opposition.

"The invitation to the political opposition to negotiate together the new programme and its details is still valid. Any consensus in Greece, even the smallest, strengthens our position abroad," Venizelos said in his statement.

The opposition conservatives who voted against the bailout deal last year have been deeply critical of the economic adjustment plan Athens agreed with the EU and the IMF, saying the policy mix is wrong, taxing the economy into a tail spin.

Doubts over the government's pledges to raise 50 billion euros ($71.52 billion) from privatizations by the end of 2015 to pay down debt emerged after deputy finance minister Pantelis Oikonomou predicted it would be tough to sell all the assets slated for privatization.

Oikonomou told lawmakers that investors were more interested in financial instruments than in buying companies. "I predict, and you will see that I'll be right, that not everything earmarked for privatisation will be sold, but much less. This is not possible (to sell everything)," Oikonomou said.

Athens managed to borrow 1.62 billion euros mostly from Greek investors via T-bills at a slightly lower yield compared to a June auction to roll over maturing short-term debt despite rising market tension over the debt crisis which is staring to affect Spain and Italy.