Forex News – Greek parties agree to form coalition government

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Antonis Samaras, the leader of the Greek conservative New Democracy party will be meeting Greek President Carolos Papoulias at 13:00 GMT on Wednesday to announce that an agreement has been reached to form a coalition government that includes his party as well as the socialist former ruling party PASOK and the democratic left.

“Greece has a government,” Evangelos Venizelos, head of the Socialist PASOK party told reporters after talks with conservative leader Antonis Samaras.

Greek state television “NET” reported that Mr. Samaras is set to be sworn in as prime minister on Wednesday evening local time.

New Democracy only narrowly beat the leftwing Syriza party that wants to scrap the bailout and negotiate a new programme. With Greek society deeply split, a repeat of the violent anti-austerity protests seen last year is a constant threat.

The new government has the difficult task of bringing Greece’s derailed fiscal targets back on track after weeks of political paralysis, following turmoil after an unsuccessful election on May 6 which led to a second round of elections on June 17.

The government has to balance dealing with a cash crunch as well as an angry Greek population that is tired of harsh austerity measures. The two main parties, New Democracy and Pasok have been working on a plan to ask other euro-zone countries for an extra two years to meet Greece’s fiscal targets and to try ease the terms of the bailout. Some euro zone countries are open to extending the period but there is stiff opposition from Germany.