Greek PM hails debt cut deal, opposition unconvinced

ATHENS Tue Nov 27, 2012 1:49am EST

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ATHENS (Reuters) - A bleary-eyed Greek Prime Minister Antonis Samaras welcomed on Tuesday an agreement by international lenders to help cut his country's debt and unblock vital flows of bailout money.

The biggest opposition party, however, dismissed the deal and slammed Germany for preventing Greece from writing off half of its debt.

After 12 hours of talks at their third meeting in as many weeks, euro zone finance ministers and the International Monetary Fund agreed on measures to reduce Greek debt by 40 billion euros ($52 billion), opening the way for 43.7 billion euros of rescue loans to be disbursed by early 2013.

"Everything went well," a visibly tired Samaras told reporters outside his mansion at about 3 a.m. in the morning. "Tomorrow, a new day starts for all Greeks," he added.

Samaras passed deeply unpopular austerity measures earlier this month to convince lenders that Athens deserved further aid payments under its ongoing EU/IMF bailout, despite missing earlier deficit and reform targets.

The wage and spending cuts contradicted Samaras's pre-election pledges to soften the bailout deal, testing the cohesion of the fragile, conservative-led, three-party coalition he has headed since June.

The Socialist PASOK, the coalition's second-biggest party, also welcomed the agreement.

"This is the new start the country needs after nine months of waiting," said its leader and former finance minister Evangelos Venizelos. "Now it's up to us to make it work," he added.

But Greece's anti-bailout opposition dismissed the agreement, saying it fell short of what was needed to make the country's debt sustainable.

"It's a half-baked compromise, a band-aid on the gaping wound of debt," said Dimitris Papadimoulis, senior lawmaker of the leftist Syriza party, the biggest opposition party which is leading in the polls.

Papadimoulis accused German Chancellor Angela Merkel of standing in the way of a 50 percent write-off of Greece's debt, which was what Athens needed. "(The deal happened) under pressure from the narrow-minded, egoistic, short-sighted economic policies of Merkel, who stingily watches over her money," he said.

($1 = 0.7713 euros)

(Reporting by Harry Papachristou; Editing by Hugh Lawson)

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