Greek leaders agree most cuts, lenders stay on: source

ATHENS Sun Jul 29, 2012 9:18am EDT

A man walks outside of a closed Piraeus bank branch in central Athens July 16, 2012. REUTERS/John Kolesidis

A man walks outside of a closed Piraeus bank branch in central Athens July 16, 2012.

Credit: Reuters/John Kolesidis

Related Topics

ATHENS (Reuters) - Political leaders in Greece have agreed on most of the austerity measures demanded by its creditors and are now eyeing pension and wage cuts to find the final 1.5 billion euros of savings still needed, a source close to the talks said on Sunday.

Greece must find savings worth 11.5 billion euros for 2013 and 2014 to satisfy its increasingly impatient lenders, who are currently visiting Athens to evaluate the country's progress in complying with the terms of its latest bailout.

A finance ministry source said the lenders, who were due to leave Athens at the end of July, would now stay until the savings plan was nailed down.

"We want to help and we will stay as long as it takes and until the plan is finalized," IMF mission chief Poul Thomsen has told the Greek finance minister, according to a Greek official.

Prime Minister Antonis Samaras's government last week managed to draw up a list of measures to achieve those savings, but the three parties in his conservative-led administration failed to agree on them, and are due to resume talks on Monday.

"The political leaders don't disagree on anything, there are just alternative proposals being discussed to protect those with low pensions or incomes in the public sector," said the source, who is involved in the talks. "We need measures worth 1.5 billion euros to finalize the 11.5 billion euro package."

Near-bankrupt Greece is fighting an increasingly desperate battle to convince skeptical European Union and International Monetary Fund lenders it has turned over a new leaf and is ready to push through long-delayed reforms to overhaul its recession-hit economy.

But the lenders have so far appeared far from convinced, and officials have told Reuters Greece is likely to require a new debt restructuring that the euro zone - faced with market turmoil in Italy and Spain as well - can ill afford.

Greek media have reported that the country's leaders are discussing possible layoffs of contractors in the public sector, a cap on pensions, cuts in welfare benefits, reductions in tax exemptions, and lower salaries for public employees as well as raising the retirement age by a year to make up the shortfall in savings.

PRESSURE ON CASH RESERVES

A decision on a new tranche of aid for Greece is not expected until September, and the country's already dire financial position appears to be getting increasingly precarious.

"The fact that we have not received the agreed aid installments has put pressure on our cash reserves. Until then, we are taking extra care in managing our cash," Deputy Finance Minister Christos Staikouras told Real News weekly.

The troika of EU, European Central Bank and IMF lenders, whose departure date is now uncertain, is due to return in September to complete its assessment of whether Greece deserves more aid.

A fifth year of recession, record unemployment, and repeated waves of austerity cuts have fuelled growing anger towards the troika and the austerity medicine it has insisted on.

Summing up the dark public mood, the GSEE union lambasted the troika after talks with it on Friday for heaping misery on Greeks.

"We agreed on one thing - that we disagree on everything," GSEE leader Yannis Panagopoulos said in a statement. "The troika men came to Greece as doctors and prescribed the medicine that would save the Greek economy and people, but in the end they proved to be charlatans."

(Writing by Deepa Babington; Editing by Tim Pearce)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (3)
AZWarrior wrote:
This is sad beyond words. Greece and Spain are lost. The Euro is a sham. The EU is a lie, and wasting the remaining treasure of the Northern European nations in a vain attempt to prop up the zombies is a lost cause. What is next? Do they expect the IMF to continue to pour money into the EU just so they can continue to live beyond their means? Let them die for goodness sake. The insane are indeed running the Asylum.

Jul 29, 2012 4:42am EDT  --  Report as abuse
UNeed_Mila wrote:
The two main coalition partners – New Democracy and PASOK agreed on a savings plan when they received the first bailout in 2010, and then again when they received the second bailout in 2011. FF to 2012, and the same people agree over again on the same things, but of course, never come to fulfilling them. Soon this government in Greece will collapse again, pending new elections, and so on. Meanwhile, the politicians of the richer EU countries are playing bankers with their taxpayers’ money…

There are two obvious conclusions from this: 1. The economic conditions in Greece are beyond repair under the present framework(s), and there is no political or social will to engage in a comprehensive recovery plan – as they failed to even produce one in 5 years until now. 2. The politicians of the richer EU countries are not bankers, and by making wrong decisions they are wasting other peoples money.

Jul 29, 2012 5:36am EDT  --  Report as abuse
scythe wrote:
(quote, Staikouras) “we have not received the agreed aid installments”

forced withdrawl from $$$ injections is the best treatment for debt junkies

Jul 29, 2012 5:48am EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.