Greece agrees to deep budget cuts

Greece has announced that they have agreed to the austerity cuts that would allow them to receive a much-needed $173 billion bailout.

David Brancaccio: Politicians in Greece today agreed to give their European colleagues what they demanded -- deep budget cuts. Without the cuts, there would be no $173 billion bailout for Greece; and without a bailout, a messy default looms.

The BBC's economic correspondent Andrew Walker joins us live from London. Hello Andrew.

Andrew Walker: Good morning.

Brancaccio: So what do we know about the details of this deal?

Walker: We know one of the things that the Greek authorities were resisting, which was the idea of having further deep cuts about 300 million euros worth of cuts, that's to say $400 million worth of cuts, in supplementary pensions. Their great pension system is that you get a basic pension and then an additional payment on top of that, related to your contributions over your working life. And that was just one step too far for the political parties that are backing the Greek Prime Minister Loukas Papademos. Now, we know that they've been struggling over the past 24 hours or so to try and find some alternative way of making those savings, and it appears they have done so, but we haven't been told exactly what the details of those other cuts are.

Brancaccio: Is it safe to say finally that a European bailout is on the way for Greece?

Walker: I think that would be a bit premature, not least because the Luxembourg finance minister, who chairs the meeting of euro group of finance ministers who are about to meet in about 10 minutes or so, he has said there is still an awful lot of detail to be gone through. Having said that, I think that what's happened in Athen's disagreement among the political party is certainly a very important development. And the head of the IMF, Christine Lagarde, who was arriving for this meeting in Brussels, said it is a positive development.

Brancaccio: Briefly now, any word on Greece's negotiations with its bondholders?

Walker: No, nothing further, but certainly all the signs are that a deal on that is very close, but I think they're probably waiting to see whether this deal on official financing can be put in place at the same time.

Brancaccio: All right Andrew, thank you very much. The BBC's economic correspondent Andrew Walker in London.

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