Greece braced for fresh protests on Wednesday as officials began setting up necessary legislation tied to a unprecedented eurozone bailout and debt swap needed to secure the deal.
European stock markets fell and the euro weakened as questions over the agreed rescue still lingered with a senior EU official suggesting that Greek experts working for Brussels return home and lend a hand in turning Greece around.
Two main Greek unions — CSEE and Adedy that together claim more than a million members — called for protests in Athens and Greece’s second city Thessaloniki at 1400 GMT over new salary and pension cuts.
The pro-Communist union Pame called for another protest in Athens two hours later, planning a march to the central Syntagma square, the scene of often violent demonstrations against austerity measures over the past two years.
Eurozone finance ministers sealed an unprecedented deal on Tuesday to provide a new 237 billion euro ($310 billion) bailout designed to keep Greece in the single currency area.
The deal provides Greece 130 billion euros in loans to 2014 alongside a 53.5 percent writedown of privately-held Greek sovereign debt which should slash 107 billion euros from the country’s debt mountain of 350 billion euros.
The austerity programme tied to the deal must pass before elections in April which pollsters say could fail to produce a clear majority, clouding prospects for later implementation of the accord.
On a visit to Athens, the head of the the EU’s European Investment Bank, urged that Greek officials working in the EU be given a sabbatical to return home to help implement reforms.
“It isn’t helpful if it’s only the Germans or other northern Europeans who announce unpleasant news about Greece,” the EIB chief told German business daily Handelsblatt.
The Greek cabinet met late Tuesday to agree on a draft bill that would include fiscal measures required in the rescue as well as clauses related to pensions and social security.
On Wednesday, parliament was expected debate reforms to the health care system, aimed at lowering costs by up to one billion euros in 2012, notably by merging various hospitals.
And on Thursday, it should vote on legislation to implement the bailout deal, including the private creditor debt writedown, a Greek government source told AFP.
A finance ministry source said the debt swap would be held on March 12 and the government hoped 66 percent of private creditors would sign up to the deal.
It could then impose a Collective Action Clause (CAC) to force the remaining hold-outs to accept the loss as well.
In the immediate term, the rescue package should be enough to avert a default by enabling Greece to repay maturing debt worth 14.43 billion euros due on March 20.
“We have only a few days ahead of us until the European Union summit (March 1-2) … and we must do a lot of things in these few days. We must complete all the prior actions,” Finance Minister Evangelos Venizelos told reporters.
Venizelos said rating agencies “might declare Greece in selective default” while the debt-swap operation was ongoing but “a selective default is only critical if the ECB (European Central Bank) and the eurozone consider it so”.
“There is a full mechanism to cover liquidity in the meantime,” he said.
Athens has until the end of the month to approve another batch of spending cuts of over three billion euros ($4 billion) tied to the rescue and is called on to amend the constitution to ensure that priority goes to debt repayments.
A constitutional amendment requires a three-fifths majority, which Greece’s two-party coalition government now has in hand.
But it must also be confirmed by a 151-seat majority in the new parliament that will emerge after April elections.
The conservative New Democracy party is expected to win the elections but will likely fall short of a parliamentary majority, while left-wing parties opposing the debt deal are touted to improve their position in parliament.