Draghi: Greek compliance must be 'flawless'

[February 24, 2012]  FRANKFURT, Germany (AP) -- The head of the European Central Bank said Greece's compliance with the terms of its bailout agreement must be "flawless" for the euro130 billion ($173 billion) program to succeed.

"The ball is now in Greece's court," Draghi was quoted as saying in an advance text of an interview with the Frankfurter Allgemeine Zeitung to be published Friday. "The key to controlling risks lies with the implementation of the program, which has to be flawless."

Draghi said it was crucial for any new Greek government that may be formed out of elections set for April to back the reforms.

"It is essential that the new government supports the program, just as the old one has," Draghi said. "Since everything depends on the implementation of the program, monitoring is very important. And that is being taken care of."

Heavily indebted Greece has agreed to reduce wages, cut spending and make its economy more business friendly in return for a second, euro130 billion bailout from other eurozone countries and the International Monetary Fund. The new bailout comes on top of a euro110 billion deal that has supported the country since 2010.

Greece also negotiated a debt reduction with its bondholders that should cut its debt load by euro107 billion.

The latest bailout will fund Greece through 2014 and lower its debt to a still-high 120 percent of economic output, down from 160 percent now. But Greece is in a deep recession that has raised doubts about whether the economy will return to growth soon enough for the country to shoulder even its reduced debt load without defaulting.

The harsh cutbacks and intrusive on-site monitoring by EU and IMF officials have rankled many in Greece, which is in a deep recession. More than two years of harsh austerity implemented to secure the rescue funds have left the economy in freefall, with businesses closing in the tens of thousands and unemployment at a record high 21 percent in November.

[Associated Press]

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