Greece admits veering from bailout obligations
ATHENS (Reuters) - Greece conceded on Thursday it had slipped "in some respects" in implementing the cuts and reforms demanded by lenders in exchange for saving Athens from bankruptcy, and tried to persuade them to cut the country some slack.
Finance Minister Yannis Stournaras made the admission after meeting senior officials from Greece's "troika" of lenders from the EU, European Central Bank and International Monetary Fund, whose inspectors have begun picking through the country's books after weeks of political paralysis.
Trying to take advantage of a shift in Europe towards more growth-friendly policy measures, the government is pressing to soften the punishing terms of a bailout that is keeping Greece solvent but also driving it deeper into recession.
Conservative Prime Minister Antonis Samaras's uneasy coalition of left and right is under intense public pressure to ease the burden on a society that is fraying at the edges. But it faces fierce resistance from skeptical European partners led by paymaster Germany.
Stournaras, a liberal economist who was sworn in shortly before meeting the troika, said Greece's fiscal adjustment program had been slowed by an election in May and a ballot re-run on June 17.
"The economy has gone through two difficult elections and the program is off track in some respects, and it is on track in others," he told reporters.
"The troika people told me jokingly that I'm not going to have a good time at the Eurogroup on Monday," he said, referring to his first meeting next week with fellow finance ministers of the 17-nation euro zone.
"I told them I'm aware of that."
The mission from the troika is reviewing Greece's faltering progress on fiscal adjustment and reform under a 130 billion euro ($162.6 billion) bailout deal.
With the economy in its fifth year of recession and almost one in four Greek workers jobless, the government says the austerity has become intolerable.
But without the next 31.5 billion euro installment of bailout funds, Greece risks running out of cash within weeks.
Challenged by an emboldened opposition committed to rejecting the bailout, Samaras has called for targeted tax cuts, a freeze on public sector layoffs, extra help for the poor and unemployed and an additional two years to cut the deficit.
In exchange, he is offering to expand and speed up the country's privatization process.
Echoing statements by other government ministers earlier this week, Stournaras said later on Thursday that Greece needed to convince its partners it was serious about reform before posing any demands to soften its bailout deal.
"The program is off track and we can't ask for anything from our creditors before we get it back on course," he was quoted as saying by the Financial Times.
In a brief statement after meeting the troika, the Harvard-educated prime minister pledged to stabilize Greek finances while fostering economic recovery.
"The prime minister underlined that the Greek government is determined to proceed more effectively towards fiscal adjustment, to speed up structural reforms so that the economy recovers, jobs are created and to secure social cohesion," Samaras's office said in a statement.
Greece's European partners say the bailout program could be adjusted to make up for time lost to two elections and a deeper than expected recession. But they will not change its main tenets or targets.
Setting a combative tone, the fiery leader of the co-ruling PASOK Socialists, Evangelos Venizelos, told party lawmakers: "Savage dismissals (of public sector workers) can't happen and aren't necessary."
In Stockholm, Swedish Finance Minister Anders Borg said on Swedish Radio on Thursday there was a major risk Greece would fail to fulfill its obligations to its lenders and end up in "some sort of default".
The troika mission chiefs are expected to leave at the end of the week after meeting the new government but technical staff, who have already started work, will remain to review Greece's compliance with the terms of the bailout.
The mission chiefs are expected to return later in July. Only then will lenders decide how to adjust the program.
Prime Minister Samaras will present his government's policy at the start of a three-day parliamentary debate on Friday. A vote of confidence on the coalition is scheduled to take place late on Sunday.
The head of the EU taskforce helping to rebuild the country's economy called on the government to urgently pay out a backlog of value-added-tax reimbursements owed to exporters to ease the financing crunch faced by Greek businesses.
The state owed exporters about 450 million euros in reimbursements since 2009, Horst Reichenbach told a conference in Athens.
"This backlog clearly should be cleared as soon as possible in view of the very difficult financial situation in which many of the exporters find themselves," he said.
($1 = 0.7994 euros)
(Additional reporting by Deepa Babington and Tatiana Fragou, Writing by Matt Robinson, Editing by Michael Roddy)
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