The FINANCIAL -- Greece's cabinet has
unanimously approved the painful reform measures the country must take
to secure a new EUR130 billion bailout from its international creditors,
a senior government official said Friday.
According to London Stock Exchange, the approval comes just hours after the caretaker government of Prime Minister Lucas Papademos lost the support of a junior partner in the coalition government and amid growing opposition to the new measures from other lawmakers and unions.
Greece's parliament must now also approve the package of measures before the country's European partners and the International Monetary Fund will unlock the new aid program, which also calls for a massive EUR100 billion debt write-down.
That vote has been set for Sunday.
Earlier Friday, the small, nationalist Laos party--which along with the Socialist party and the conservative New Democracy party make up the coalition--effectively withdrew from the government with four party officials resigning from the cabinet.
The Laos party controls just 16 seats in Greece's 300-member parliament. Even without its support, the two main coalition partners have a combined 236 seat majority. According to a second government official, Papademos will announce a cabinet reshuffle Sunday to replace the departing officials.
In October last year, Greece's European partners and the International Monetary Fund promised a fresh bailout to the country to cover its financing needs through 2015. They have also demanded, as a precondition for that loan, that Greece's private-sector creditors write down EUR100 billion of the country's debt.
According to one cabinet official leaving the meeting, the European Central Bank , which holds tens of billions of euros of Greek debt, will also indirectly participate in the debt-swap plan.
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