GREECE’S Cabinet yesterday approved a final set of austerity measures sought by the EU and International Monetary Fund (IMF) as a condition for a 130-billion-euro (US$171.07 billion) rescue package, raising the chances of a deal being made this week to avert a chaotic default on its debt.

The approval was largely a formality after Athens unveiled details of the extra budget and public sector wage cuts worth 325 million euros to euro zone partners.

Lingering doubts over whether Greece can bring its mountain of debt down to more manageable levels in coming years could still hold up the rescue package. Some officials in the 17-nation currency union warn chances of a deal at a euro zone meeting today are little higher than 50-50.

“The 325 million euros worth of measures were approved unanimously,” said one minister, speaking on condition of anonymity, about the cuts, part of a 3.3-billion-euro package of austerity measures that have triggered riots in Athens.

A government official said the Cabinet had also agreed to launch by March 8 a debt swap for private creditors with the aim of completing it by March 11. The swap is intended to accompany the rescue deal and will mean creditors take a 70 percent cut in the real value of their holdings.

After months of often acrimonious negotiations, Greek hopes are rising that today’s meeting in Brussels will endorse the rescue which Athens needs to avoid bankruptcy March 20 when major debt repayments fall due.

“The Greek people have done everything they can and we are determined to make good on our commitments,” Public Order Minister Christos Papoutsis said before the meeting.

In a statement, Prime Minister Lucas Papademos regretted that extra pension cuts could not be avoided, but said the impact was limited because it would only affect the part of the pension above a monthly threshold of 1,300 euros.

“We all agree the immediate support of economic activity is a priority of the government’s economic policy,” he added, while not detailing what growth measures were under consideration.

A survey by pollster MRB for yesterday’s Realnews newspaper showed 72.7 percent of Greeks want the country to stay in the euro, but only about half believe it will manage to do so.

On Friday, German Chancellor Angela Merkel, Italian Prime Minister Mario Monti and Papademos all voiced optimism about a Greek accord during a three-way conference call, Monti’s office said.

However, Jean-Claude Juncker, who will chair today’s meeting of the Eurogroup in Brussels, made clear that urgent work was still needed to get a program to reduce Greece’s crippling debts back on track.

At stake is a target of lowering the debt from the equivalent of 160 percent of annual Greek economic output now to a more manageable 120 percent by 2020.

At the moment, EU and IMF officials believe that target — which assumes Greece will run a budget surplus next year, excluding the massive cost of its debts — will be missed.(SD-Agencies)

Under the main scenario of an analysis by the European Commission, the European Central Bank and the IMF, Greek debt will fall to only 129 percent of GDP in 2020, one official said.

The euro zone is therefore looking at modifying the deal negotiated over many months with private creditors under which they would accept a cut of around 70 percent in the real value of their Greek bond holdings.

Senior euro zone finance officials met yesterday to discuss the analysis and find ways to bring the debt closer to the 120 percent target before the finance ministers gather today.