Greece says wins more time from creditors but no deal confirmed

(ATHENS) - Greece's finance minister announced Wednesday he had agreed on a new austerity package with its international creditors and won more time to fix the debt-crippled nation's finances -- but the European Central Bank insisted there was no deal yet.

Yannis Stournaras told parliament the so-called troika had granted a long-sought extension in return for the 13.5-billion-euro ($17.5-billion) austerity package which is necessary to unlock vital international loans but which still has to win the backing of the government's coalition partners.

But ECB head Mario Draghi, whose institution is negotiating with Greece along with the European Union and the International Monetary Fund on its bailout, said there was no deal yet.

"The review is not finished yet," he told reporters in Berlin. "I understand progress has been made but some parts need to be defined and I don't know more than that."

And Finance Minister Wolfgang Schaeuble of key paymaster Germany said: "As far as the German government knows there are no new findings."

"When the proposals (from the troika) are on the table, the Eurogroup will look at them. There is nothing more to add."

Stournaras had said earlier that he had finalised the cutbacks agreement in talks with the troika's auditors, and told parliament: "We have obtained the extension."

He said he will present two draft laws related to the package to parliament next week.

The new measures, to be voted by November 12, still have to be approved by Greece's three-party coalition government, with key allies still split over the painful reforms. The latest austerity package is key to unlocking a 31.2-billion-euro ($40 billion) instalment from its rescue loans.

According to the draft budget, Greece plans to cut the public deficit to 6.6 percent of output this year -- still over twice the EU limit.

European leaders have long maintained that extra time for Greece means more money from eurozone taxpayers.

Stournaras said Athens was hoping to again persuade its creditors to grant lower interest and longer repayment terms on loans already received under its massive bailout.

"Greece aims to cut its debt through lower interest rates and an extension in the repayment of loans it has received from the EU and the IMF," he told parliament.

German daily Sueddeutsche Zeitung and Greek media had reported that Athens would be given two more years to slash its public debt mountain as well as implement key labour reforms and privatisations.

A finance ministry source had said earlier that the government hoped to present the deal to a Eurogroup meeting on Thursday, ending a negotiation that has dragged on since July.

Greece, heading for a sixth straight year of recession, is desperately trying to unlock a new instalment of loans worth 31.2 billion euros from the troika of lenders.

In exchange, Athens has to agree to tough economic reforms but the measures are deeply unpopular among ordinary Greeks who have taken to the streets in sometimes violent protests.

With unemployment topping 25 percent, the government has been pleading for more time to implement the austerity measures.

According to media reports, Athens will be given up to 2016 to cut its deficit to the EU limit of three percent of its gross domestic product (GDP) rather than the previous deadline of 2014. Its total debt stood at a whopping 150 percent of GDP at the end of the second quarter, according to Eurostat.

The reported agreement also scales back targeted privatisation revenue to 10 billion euros by 2016 -- effectively nine billion less over an extra year.

But it expects a two-year rise in the statutory retirement age and new cuts to state salaries and pensions, the reports said.

Earlier Wednesday, ECB executive board member Joerg Asmussen said that if Athens does get another two years to implement its reforms, other eurozone states would have to lend it more money to bridge the deficit shortfall.

Athens recently pledged 7.8 billion euros ($10.2 billion) in cuts next year, only to be told by the troika that an effort of 9.2 billion euros is required to counterbalance the effects of the persistent recession.

Prime Minister Antonis Samaras's political allies, the socialist and moderate leftist parties, have balked at calls to lower severance pay and facilitate layoffs while the country faces record unemployment.

"Greece will be saved by those who dare," Samaras said Tuesday after a meeting between the coalition leaders. "We have already modified many of the troika's original proposals -- on labour issues and others -- and the negotiation continues."