Political crisis, privatization gap won't derail bailout: Greek PM

ATHENS Sat Jun 22, 2013 5:20pm EDT

Greece's Prime Minister Antonis Samaras gestures as he delivers his speech during an agreement signing with the European Investment Bank (EIB) in Athens June 12, 2013. REUTERS/John Kolesidis

Greece's Prime Minister Antonis Samaras gestures as he delivers his speech during an agreement signing with the European Investment Bank (EIB) in Athens June 12, 2013.

Credit: Reuters/John Kolesidis

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ATHENS (Reuters) - Greece's recent government crisis and failure to meet privatization targets will not derail an international bailout, Prime Minister Antonis Samaras said on Saturday.

Samaras's government saw its parliamentary majority sharply reduced on Friday after the small Democratic Left party left the ruling coalition to protest against an abrupt shutdown of the state broadcaster ERT.

Samaras told the newspaper To Vima that his new, two-party government with the Socialist PASOK party would be more coherent, adding that he expected no problems in talks with lenders who are inspecting Greece's austerity and economic reform program.

"The government went through a rough patch over the last few days but it stood on its feet and continues with renewed determination and much better cooperation," To Vima quoted him as saying.

Samaras's conservative New Democracy party and PASOK together control only 153 of the 300 seats in parliament. A few independents may also back the government, and the Democratic Left has signaled it could support some reforms on a case-by-case basis to keep Greece in the euro.

Samaras and PASOK leader Evangelos Venizelos are expected to meet as soon as Sunday to update their coalition agreement and arrange a cabinet reshuffle. According to Greek media reports, Yannis Stournaras is expected to remain finance minister.

The new government will have to conclude talks with the so-called "troika" of international lenders - the European Union, the International Monetary Fund and the European Central Bank - who return to Athens later this month for a regular review of Greece's compliance with the terms of their bailout.

Athens will have to acknowledge that it is likely to miss its privatization targets after its failure to sell off the natural gas company DEPA blew a 1 billion euro hole in the bailout plan, raising the prospect of fresh austerity measures to make up the shortfall.

"I don't think there will be any problems (in the troika talks)," Samaras said in the interview, pointing to mid-year deficit figures that are below interim targets.

"We are beating the (bailout plan's) overall targets ... everybody agrees that in terms of fiscal adjustment we are ahead of targets. There are some partial problems with partial targets but these are addressed and will be dealt with," Samaras said.

Greece needs to plug a funding gap and clinch a positive review to allow the IMF to keep bankrolling the 240-billion-euro bailout.

In their updated coalition agreement, PASOK and Samaras's conservative New Democracy party are expected to reiterate their pledge to meet Greece's fiscal goals, while rejecting new austerity measures and agreeing to pushing the lenders gradually to allow tax cuts to help soften a deep, six-year-old recession.

(Reporting by Angeliki Koutantou; writing by Harry Papachristou; Editing by Kevin Liffey)

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