IMF welcomes long-awaited letter from Greek leader

ATHENS Thu Nov 24, 2011 8:11pm GMT

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ATHENS (Reuters) - The International Monetary Fund welcomed a written pledge from a Greek party leader backing a bailout deal and the prime minister was quoted as saying other lenders were satisfied as well, bringing Greece closer to getting funds to avoid bankruptcy.

In a further boost for technocrat Prime Minister Lucas Papademos, a cabinet minister said the foreign lenders would send a troika mission back to Athens next month to hold talks on Greece's new 130 billion euro (112 billion pound) bailout plan.

The European Union and International Monetary Fund have said leaders of all three parties in Papademos's national unity government must provide a written pledge that they will back the austerity measures before the next round of funds is doled out.

Antonis Samaras, leader of the conservative New Democracy party, had balked at the demand before sending a letter to the creditors Wednesday.

In his letter, Samaras said he supported Papademos's government and Greece's bailout plan, though he also repeated his call for changing some economic policies demanded as a condition of the plan.

The IMF in a statement said it welcomed the letter from Samaras and the commitment that any changes his party proposed would be consistent with the basic framework of the program.

"We welcome that New Democracy has expressed its support for the key objectives and policies of the program," it said.

Earlier, Papademos was quoted as saying the European Union was satisfied as well.

"Papademos told the cabinet the content of the letter was satisfactory. There is an initial positive response to it (from abroad)," a government minister told Reuters on condition of anonymity.

Samaras, a Harvard-educated economist, wants to change the policy mix to allow Greece's economy to start growing again after four years of recession exacerbated by tax hikes, spending cuts and reductions in wages and pensions.

Without the 8 billion euro tranche -- the sixth instalment of a 2010 bailout worth a total 110 billion euros -- Greece will run out of money next month, defaulting on its debts and raising the prospect of a messy exit from the euro zone.

RESISTANCE

EU leaders have insisted on the written pledge that Greece's political leaders will continue backing the bailout plan beyond the life of Papademos's interim government because they fear the parties will otherwise try to wriggle out of their commitments.

An election has been pencilled in for February 19. Opinion polls suggest Samaras's party will win most votes but not enough for an overall parliamentary majority.

The Papademos government, confirmed in office last week, is pushing an austerity budget through parliament and has pledged more structural economic reforms despite stiff resistance from labour unions who staged new protests Thursday.

The troika - comprising representatives of the European Commission, the European Central Bank and the IMF - will arrive in Athens on December 12, the government minister said, four days after parliament is scheduled to approve the 2012 budget.

The troika last visited Greece last week to establish initial contacts with the new government of Papademos, who is a former vice president of the ECB with no political experience.

Earlier Thursday, in a sign of the challenges facing Papademos in reforming a country already in its fourth year of recession, riot police clashed with trade unionists protesting against a new property tax.

Police arrested 15 people, including the leader of the GENOP labour union, for obstructing access to an office of Greece's biggest power company PPC. The firm is charged with collecting the property tax via electricity bills.

"We will not back down in our struggle. This fight is about the whole of Greek society. It is about not cutting power to the homes of the poor, the unemployed, the pensioners," Nikos Fotopoulos, head of GENOP, said before being detained and taken to a public prosecutor to face possible charges.

SOLIDARITY

"The fight will continue till the end. This law will become invalid in practice, with the help of all the people."

GENOP, which represents power workers and has close links to the Socialist PASOK party serving in the coalition government, have disrupted operations at the PPC data processing centre since Sunday by blocking the entrance to the offices.

Having PPC collect the new property tax with electricity bills makes it harder for people to avoid paying it in a country known for tax evasion and also brings the risk of their power being cut off. However, the government has said it has no plans to cut electricity to impoverished non-payers for now.

Public sector unions representing about half a million workers halted work for two hours Thursday in protest against the austerity measures and the draft budget.

Greek private and public sector unions plan a national strike on December 1.

GENOP is one of Greece's most hardline labour unions. In recent years it has held a number of strikes that have disrupted electricity supplies and scuppered government plans to sell a stake in or find strategic private partners for PPC.

(Additional reporting by John Kolesidis, writing by Gareth Jones)

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