UPDATE 2-Troika pauses Greek talks, no deal yet on austerity cuts
* Last round of talks before inspectors leave
* Discussion marred by tensions over public sector reforms
* Talks resume in a week
* Austerity package needs to be finished by Sept 28
By Lefteris Papadimas and James Mackenzie
ATHENS, Sept 21 (Reuters) - Greece and its international lenders made progress on hammering out a contentious austerity package but failed to clinch a deal at the last round of talks before visiting inspectors leave Athens this weekend, officials said on Friday.
The talks -- marred by tension and disagreement over public sector reform -- are due to resume in a week when inspectors from the so-called troika of European Commission, European Central Bank and International Monetary Fund return to Athens.
Near-bankrupt Greece needs the troika's blessing on the spending cuts worth nearly 12 billion euros to unlock its next tranche of aid, without which it faces certain default and a potential exit from the euro zone.
"There has been progress... the talks are continuing," a Greek finance ministry official told reporters after talks between the troika and the finance ministry broke up. "We have agreed on a number of measures but more are needed."
The EU and IMF also confirmed a "brief pause" in talks, which it said had notched up progress.
"The mission has had productive discussions with the authorities since early September and has made good progress during this period," the EU and IMF said in a statement.
"The mission looks forward to continuing those discussions soon in Athens."
The austerity package needs to be finished by September 28, the Greek official said.
"We need to have the package ready by Sept. 28 to present it to the Euro Working Group meeting. Our time limit is until then," the official said. "We must also have a buffer of measures in the event that we miss targets."
Prime Minister Antonis Samaras's government has acknowledged that the talks with the troika have been "difficult" with the inspectors pressing Athens to make deep cuts and accept an end to its taboo on firing civil servants.
So far, Greek officials have said agreement on 9.5 billion euros of the 11.5 billion-euro package of spending cuts had been reached. That includes 6.5 billion euros in cuts to wages, pensions and benefit payments and a further 1.1 billion euros in savings planned from an increase in the retirement age.
An additional 1.9 billion euros would come in savings from various modernisation measures approved by the troika, leaving the two sides still wrangling over some 2 billion euros in proposed savings in health, defence and local government.
The deeply unpopular cuts have put additional strain on Samaras's already fragile conservative-led coalition, which has bickered for weeks over plans to lay off civil servants and slash pensions.
Still, with Greece facing a euro zone exit -- what Samaras called a "nightmare" and a "total disaster" scenario -- without further bailout funds, party leaders in his coalition have signalled they will reluctantly back the package in the end.
Once all sides agree a final deal on the cuts, the troika is expected to issue a report on Greece's progress in meeting the terms of its bailout that will determine whether the country gets further bailout funds to stay afloat.
EU officials and diplomats earlier told Reuters the EU/IMF report looked set to be delayed after the Nov. 6 U.S. elections because policymakers want to avoid any shock to the global economy, but the EU's chief inspector for Greece denied the report.
- White House reverses, says Obama met uncle and lived with him during law school
- Flights delayed as air pollution hits record in Shanghai
- South Africa mourns Mandela, will bury him on December 15 |
- Analysis: Boeing bidders dangle goodies to win 777X jetliner
- RPT-UPDATE 1-Ford leans on global Mustang to burnish overseas image