Greece's government warned Tuesday that the debt-crippled country will have to ditch the euro if it fails to finalize the details of its second 130 billion ($169 billion) international bailout and that more austerity measures may need to be implemented, dpa reported. A key component of the package, which was agreed last October, is that Greece has to persuade its creditors to take a 50 percent hit on the face value of their holdings of Greek debt. Greece has the highest debt burden relative to the size of its economy in the whole of the 17-nation eurozone and the writedown will help get it down to more manageable, though still high, levels. Spokesman Pantelis Kapsis said that negotiations in the next three or four months with international debt monitors will "determine everything," including whether Greece escapes a disastrous bankruptcy. Greece is being kept afloat by a first, ?110 billion ($142 billion) international bailout agreed in May 2010, after investors shocked by the country's huge budget deficit and debt mountain demanded sky-high interest rates to continue buying Greek bonds. An additional rescue package was agreed in October, after it became clear that the first batch of funds would not suffice, but that deal has yet to be finalized. Sorting out the details of the bailout, which also depends on banks and other big financial firms forgiving Greece a substantial part of its debt, is the main task of the coalition government headed by former central banker Lucas Papademos, whose short mandate is expected to expire in early April. -- SPA
