In an abrupt U-turn, Greece's conservative leader wrote to tell international creditors he backed the country's fiscal targets, clearing a major sticking point to get a desperately needed loan that will prevent a devastating Greek bankruptcy.
In a letter to the heads of the European Union and the International Monetary Fund, Antonis Samaras said his conservative New Democracy party also supports many of the austerity measures his debt-wracked country has already implemented.
The letter was made public hours after German Chancellor Angela Merkel issued a blunt warning that rescue loans would remain frozen until Greece's fiscal targets received cross-party backing.
While naming public expenditure cutting, fighting tax evasion, structural reforms, and privatizations among these measures, Samaras made no mention of tax hikes to bolster flagging state revenues, which he has vocally opposed in the past.
"On the evidence of the budget execution so far, we believe that certain policies have to be modified," Samaras wrote. "We intend to bring these issues to discussion, along with viable policy alternatives."
Greece's international creditors have insisted that Samaras, along with other party leaders supporting the country's new interim coalition government, must commit in writing to backing the country's new euro130 billion ($174 billion) bailout plan approved last month.
Otherwise, the vital next euro8 billion ($10.71 billion) loan installment _ from the euro110 billion bailout agreed on in May 2010 _ will not be released.
German Chancellor Merkel spelled that out again earlier Wednesday.
"The Greek question is still unresolved because we do not yet have the preconditions to pay out the next installment," Merkel told Parliament in Berlin.
Greece's second international bailout includes provisions for banks and other private holders of Greek bonds to write off 50 percent of their Greek debt holdings, potentially cutting the country's debt by euro100 billion ($134 billion).
Greek Prime Minister Lucas Papademos' new government was appointed earlier this month after political turmoil led to the resignation of Socialist Prime Minister George Papandreou. Papademos is a former central banker and deputy head of the European Central Bank. The technocratic government is expected to lead Greece until early elections in February.
Juergen Baetz reported from Berlin.