Greece in deal to avert medical supply shortage

Greece's debt-ridden government reached a deal on payments to medical suppliers yesterday, a minister said, potentially ending a dispute that unions warned could put patients' lives at risk.

"We proposed today and there was an agreement in principle on the pay-off of state debt to providers," Finance Minister George Papaconstantinou said.

The deal will go to Parliament this week and comes a day after Moody's slashed its sovereign rating for Greece to "junk" status on concerns about how Athens can repay its debts.

A meeting with providers on Monday had failed to reach a settlement, raising the possibility of critical shortages at Greek hospitals since suppliers had frozen deliveries over the debt, which dates to 2005. Health Minister Marilyza Xenogiannakopoulou accused medi-cal goods suppliers of "blackmail" as the government seeks to end years of waste and fraud in the hospital sector.

Unions called for an immediate settlement to avoid putting patients' lives at risk, with a wide range of goods from cotton to pacemakers affected.

Under the deal reached yesterday, the government will pay a total of €490 million for 2005 and 2006. It had already paid €1.2 billion in December for those two years and a part of 2007.

Debt for 2007, 2008 and 2009 will be covered by issuing Treasury bonds worth €5.35 billion.

The government has also committed to paying €100 million - or €200,000 for each company involved - because of "several firms' Treasury difficulties due to late payments," said Mr Papaconstantinou.