International

Greek Government Reaches Austerity Deal That's Key To Bailout Payment

European Central Bank President Mario Draghi says he's been told by GreekPrime Minister Lucas Papademos that a deal has been reached on new austerity measures that Eurozone finance ministers have been seeking from Greece before it gets a crucial $173 billion bailout, The Financial Times is reporting.

The Associated Press reports that "a spokeswoman for the prime minister's office says the agreement with the majority Socialists and the conservatives will allow alternative cuts to those rejected early Thursday during a meeting of the three coalition party leaders. She spoke on customary condition of anonymity."

One of the sticking points to an agreement had been a demand from creditors that Greece make nearly $400 billion worth of pension cuts. It's not known just yet how Greek lawmakers resolved that issue.

Previous austerity measures in Greece over the past year have sparked some riots.

Planet Money has previously explored "what's wrong with Europe" and why the financial crisis there matters to the U.S.

Update at 12:50 p.m. ET. More Details.

From an Associated Press Q&A about what the Greek government has agreed to do:

"Q: What are the main points of the deal?

"A: Greece has agreed to a range of austerity measures designed to bring its deficit under control. They include a 22 percent cut in the monthly minimum wage to $780, layoffs for 15,000 of civil servants and an end to dozens of job guarantee provisions.

"Q: Why is this budget cutting so important?

"A: Without it, the country would not be eligible for a $170 billion bailout from other countries in Europe and the International Monetary Fund."

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