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Greece reaches deal with creditors on austerity: PM

ATHENS (AFP) - Greece on Tuesday reached agreement with its international creditors on a new wave of austerity measures necessary to unlock new bailout loans, Prime Minister Antonis Samaras said.

"Today we concluded the negotiation on the measures and the budget,"
Samaras said in a statement, adding that approval by parliament of a new round of cuts will keep Greece in the 17-nation eurozone.

"If this deal is approved and the budget is voted, Greece will stay in the euro and exit the crisis," the prime minister said.

Samaras has warned that the country will run out of cash next month unless it can secure the release of a 31.2-billion-euro ($40-billion) loan instalment from its EU-IMF financial assistance package, which depends on progress on stalled reforms.

"If the deal does not pass... the country will be led to chaos," he said.

The PM has sought to persuade his socialist and moderate leftist allies to help push the measures through parliament by November 12, when eurozone finance ministers are expected to decide on whether to release the loans.

"We did whatever was possible," Samaras said. "We achieved important improvements, even at the last minute."

The Democratic Left party that supports the coalition continues to oppose an additional raft of required labour reforms which it says goes beyond a prior pledge by Greece for spending cuts of 13.5 billion euros over the next two years.

The so-called 'troika' of creditors -- the EU, IMF and the European Central Bank -- insist on additional measures to cut labour costs and increase mobility, such as lower severance pay and shorter dismissal warnings.

The leftists counter that such measures are counter-productive as they will force the state to pay more in jobless benefits and socially unfair when the country already has an unemployment rate of over 25 percent.

"(The party) fought for labour relations in order to protect already weakened labour rights," the party said in a statement.

"The manner in which the negotiations turned out does not find us in agreement. (The party) stands on its position," it said.

The 2013 budget will be tabled in parliament on Wednesday and a vote on a first part of the austerity measures involving privatisation will also be held during the day, a parliament source told AFP.

The government has enough votes in parliament to pass the overall package even if the moderate leftists refuse to give their support.

A number of socialist lawmakers have threatened to oppose the privatisation bill but party leader Evangelos Venizelos has pledged to support Samaras.

"The socialist party will operate as a guarantor of stability and the country's strategy," Venizelos said on Tuesday.

"We need to follow with consistency a strategy to finally take the country out of the crisis," Venizelos said.

Hannes Swoboda, head of the socialists and social democrats in the European Parliament, also urged Athens to approve the measures as soon as possible.

"If the government falls, it would be a disaster," Swoboda said after a two-day round of talks with Greek officials.

"If there is no other way to convince the troika now, I would advise to accept the package" and elaborate a clear strategy or road map of discussing labour relationships in the coming months with experts, he said.

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