IMF asks Greece to cut wages, sees debt deal soon

ATHENS, Greece (AP) — Greece and the IMF said Wednesday that negotiations for landmark debt deals will be concluded in a "matter of days," raising hopes that the country will dodge a disastrous default in the spring.

Greece is in talks with private creditors to have them take losses on their bondholdings and with its international bailout rescuers to receive new loans.

"In the coming days, the agreements must be completed," government spokesman Pantelis Kapsis said.

Debt inspectors from the European Commission, European Central Bank and the International Monetary Fund, known as the troika, are in Athens for talks on a second €130 billion ($171 billion) bailout package.

That deal is tied to an agreement with private creditors to accept losses on Greek bonds, which will cut €100 billion off the country's national debt.

Chief IMF inspector Poul Thomsen also said a deal was close, but pressed the recession-plagued country to lower employment costs and even slash the minimum wage to make the economy more competitive.

"It's a matter of days," Thomsen was quoted as saying by the Athens daily Kathimerini. "The discussions for the (new) program will be concluded very soon."

Thomsen insisted wages in Greece remain too high and urged the government to consider cutting the minimum wage of €750 ($988) gross pay per month.

Greek unions and employers are to resume negotiations on Thursday in an effort to cut labor costs, but both sides are already in agreement that the minimum wage and basic private sector pay should not be affected, arguing such a move would only deepen the recession.

The EU statistics agency Eurostat on Tuesday revealed that unemployment in December in Greece rose to 19.2 percent, the second highest rate in the eurozone after Spain, which stood at 22.9 percent.

Greece and its creditors are anxious to close the new rescue deals ahead of a March 20 Greek bond repayment worth €14.5 billion ($19.1 billion) that the country cannot afford. A default would spell disaster for the country and destabilize European and global markets.

Formed in November, the coalition government is backed by the majority Socialist party, rival conservatives and the small right-wing LAOS party.

Kapsis said Prime Minister Lucas Papademos would summon the leaders of those parties to a meeting to agree on the new deals and required austerity measures.

LAOS leader George Karatzaferis sent a letter Wednesday to the top European Union officials, calling on the European parliament to take a position on Greece's debt agreements and describing the current debt inspection arrangements an "economic dictatorship."

In the letter, Karatzaferis wrote: "Reform cannot happen at gunpoint, especially when it requires the participation of the complex structure of an entire society."

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Derek Gatopoulos in Athens contributed.