Greece Coalition Government

Greek political leaders struck an agreement on a governing coalition that will seek relief from austerity measures tied to emergency loans, with New Democracy head Antonis Samaras set to be the prime minister.

New Democracy, which won a June 17 election with almost 30 percent of the vote, will join forces with the socialist Pasok party, which finished third, and the sixth-place Democratic Left. They will hold 179 seats in the 300-member parliament.

“Greece has a government,” Pasok leader Evangelos Venizelos told reporters today in Athens. President Karolos Papoulias will probably swear in Samaras after the two meet at 4 p.m. local time, said an official with New Democracy who declined to be named.

European officials have held out the prospect of flexibility over fiscal austerity for Greece after its election that amounted to a referendum on remaining in the 17-nation euro currency union. Greece has slipped behind budget-cutting targets imposed by the euro area and the International Monetary Fund in exchange for 240 billion euros ($305 billion) in aid pledges over the past two years.

All three parties have committed to forming a government that will keep Greece in the euro area and fight to change some austerity measures that have led the country into a fifth straight year of recession. The government in Athens may seek to push back against required cuts in pensions and the minimum wage and the pace of budget-deficit reductions.

Source: Bloomberg