Greek PM to meet euro leaders, seeking budget leeway
ATHENS (Reuters) - Greek Prime Minister Antonis Samaras will next week hold his first meetings with euro zone leaders since taking office, striving to assure them he will honor a pledge for more austerity and gauging whether they could grant him more time to pull it off.
Having recovered from eye surgery that has prevented him travelling since June, Samaras will fly to Berlin and Paris to meet German Chancellor Angela Merkel and French President Francois Hollande. Earlier in the week, he will meet euro zone chief Jean-Claude Juncker, Greek and German government officials said on Wednesday.
Samaras will meet Merkel on August 24, German government spokesman Steffen Seibert told reporters. The dates of the other two meetings will be announced soon, a Greek official said on condition of anonymity.
Samaras will insist he can ram through an austerity package worth about 11.5 billion euros ($14.2 billion) -- a key condition to continue receiving EU/IMF bailout funds and avoid default and a possible exit from the currency club.
Greece is falling short of the budget cut and privatization promises it made in March to obtain a second, 130-billion euro bailout from the European Union and the International Monetary Fund. This has led to calls by politicians in its biggest lender, Germany, for the country be ousted from the euro zone.
"Our key priority is to regain our credibility by showing our determination," the government official said.
Greece has yet to nail down the requested austerity package.
The bulk of the cuts will come from state salaries and pensions, and up to 40,000 public sector firings, further angering an austerity-weary public that often takes to the streets. The coalition's two leftist junior partners have also opposed any further cuts.
Samaras is already preparing public opinion for yet more suffering. "We're all having a difficult time. There will be more hardship," he said on Monday from his southern Greek home region of Messinia, where he spends the Assumption holiday.
EU officials told Reuters last month that Athens was way off its bailout targets, was unlikely to be able to pay what it owes and further debt restructuring is likely to be necessary if it was not to be abandoned.
In a bid to offer suffering Greeks some hope, Samaras will use his talks next week to raise a long-standing proposal that the measures be spread over four instead of two years, to soften their impact on a Greek economy enduring its longest and deepest recession since World War Two.
No formal request will be made but the proposal will be broached as part of exploratory talks, the official said. "The matter of extension is already being debated in Greece and abroad. Its official submission is a different matter".
Berlin insists that Athens honor its pledges but was open to discussion, Seibert said.
Asked about Greece seeking a two-year austerity extension, he said: "The chancellor will of course first listen to what Mr Samaras has to say about the situation in Greece and about the implementation of its program. For her, as for the rest of the German government, the agreed memorandum of understanding which sets out what the Greeks must achieve and which remains valid for us, forms the basis for working together with or helping Greece."
A two-year extension to narrow the budget deficit below 3 percent of GDP in 2016 instead of 2014 was a key plank of Samaras's campaign for the June 17 election that brought him to power as head of a fragile three-party coalition.
But Samaras and his finance minister, Yannis Stournaras, put the demand on the back burner after meeting EU/IMF inspectors in Athens last month, realizing that no concessions would be considered until the lenders were convinced of their commitment to austerity - a big task given repeatedly missed targets and broken promises over the past two years.
They must deliver the 11.5 billion euros before the inspectors return in early September to decide whether to release the next loan tranche and draft a key report that will determine whether the country will be supported or abandoned.
"For all governments, not just the German government, the troika report will be the basis on which we decide how to proceed," Siebert said.
An extension would mean Greece's bailout package may have to be increased by 20-50 billion euros, according to estimates by some euro zone officials and economists, and there is no appetite in the euro zone to give Greece yet more money.
However, European policymakers are already working on "last chance" options to bring Greece's debts down and keep it in the euro zone, with the ECB and national central banks looking at taking big losses on the value of their bond holdings, euro zone officials have told Reuters.
The latest aim is to reduce Greece's debts by a further 70-100 billion euros, several senior euro zone officials familiar with the discussions told Reuters, cutting its debts to a more manageable 100 percent of annual economic output. Citing a Greek government document, the Financial Times reported on Tuesday that Greece put the price tag of a two-year extension at 20 billion euros.
According to the report, Athens hopes to cover that amount without help from its euro zone partners, tapping an existing IMF loan, short-term debt sales and a possible postponement of debt repayments from the first EU/IMF loan it obtained in 2010. ($1 = 0.8116 euros)
(Additional reporting by Andreas Rinke in Berlin and Barbara Lewis in Brussels, editing by Mike Peacock)