Greek nation's survival is 'red line' in debt talks: PM

Greek Prime Minister George Papandreou said yesterday the fate of his country was at stake in the current finance crisis and vowed to defend the interests of the poor in negotiations with the EU and IMF.

"Today what is most important is the survival of the nation, that is our red line," he told lawmakers in Parliament in a question and answer session as the debt talks went into their final stretch.

"The measures which we must take, economic measures, are necessary for the protection of our country, for our survival, for our future so that we can stand firmly on our feet," he said.

"It's a patriotic responsibility which we undertake no matter what the political cost."

Earlier a government source told AFP that Greece, the EU and the IMF were "very close" to agreeing the austerity measures required to secure desperately needed loans Athens is counting on to avert default.

The source said a deal would be announced by tomorrow.

A week ago Greece asked the EU and IMF to activate a three-year rescue package worth €45 billion this year alone as it faces a May 19 deadline to repay nine billion euros in maturing debts.

Greece is negotiating extra budget cuts with its international partners as conditions for the loans on top of an already promised austerity drive aimed at slashing the country's public deficit, among the highest in Europe and more than four times the EU limit.

The IMF and the EU have asked for Greece to slice off by next year 10 percentage points from a public deficit that reached 13.6 per cent of output in 2009, a top union official said Thursday.

Athens was also asked to get rid of 13th and 14th month bonuses for public sector workers and pensioners, the union official said after syndicates were briefed by Papandreou on the new measures.

Another unionist said value-added tax would also go up.

"Have you understood that these measures that are being recommended to you are measures of destruction?" the head of the Left Coalition Syriza, a small left-wing party, Alexis Tsipras, told Mr Papandreou and fellow lawmakers.

"There is no other choice, ask for the verdict of the Greek people, call a referendum," he added.

The final stretch of the negotiations comes as the country prepares for annual May 1 celebrations, with three demonstrations expected against the measures, which will hit the public sector particularly hard.

Greek unions, which were preparing for May 1 march and then a May 5 general strike, have vowed to fight wage cuts.

"We must fight a flattening not only of salaries but also social rights without precedent in the post-war period," the presdient of the Adedy public sector union Spyros Papaspyrou said.

"May 1 will be a response, but May 5 will be the defining response."

In the face of mounting pressure against the budget cuts, Papandreou insisted that the poor must not suffer disproportionately because of the austerity drive.

"We are holding tough negotiations to protect what we can for the weak and the middle class in our country," he said.

In particular, Mr Papandreou vowed to maintain spending on healthcare but root out corruption in the sector, one of the most wasteful parts of the Greek economy.

"We will mercilessly strike against waste, corruption and speculation in the health sector," he said, the last point a reference to the common practice of overcharging for health services.

"It was not the IMF's fault that billions had been lost in the black hole of corruption.