* Greece readying for review by "troika" of lenders
* PM Samaras wants austerity eased, more time to cut debt
* Manufacturing slump worsens, Credit Agricole in talks on
By Deepa Babington and George Georgiopoulos
ATHENS, July 2 The European Central Bank told
Greece on Monday not to waste time trying to renegotiate its
international bailout as government ministers hashed out a plan
for easing its punishing terms before a review by the country's
Echoing Greece's euro zone partners, ECB policymaker Joerg
Asmussen signalled that Prime Minister Antonis Samaras was
unlikely to win much leeway in imposing austerity measures
demanded by the European Union and IMF under its bailout
"The first priority for the new Greek government has to be
getting the programme back on track," Asmussen, an ECB Executive
Board member, said in a speech in Athens. "The new government
should not lose precious time looking to avoid or loosen the
Facing huge public pressure, Samaras wants more time to meet
targets and to dilute the austerity measures that have helped
condemn Greece to a fifth year of recession.
Ministers from the conservative-led coalition were huddled
in talks on Monday to work out the plan before "troika"
inspectors from the EU, ECB and IMF begin their review of
Greece's faltering progress in fiscal adjustment and reforms.
Greek and troika sources said the inspectors would start
their work on Wednesday, with mission chiefs also visiting to
meet the new government. The process could take weeks.
"We haven't seen any numbers for some time now. We need at
least a week to catch up," a troika official told Reuters.
Samaras's election victory on June 17 over a radical leftist
bloc committed to tearing up the bailout deal removed the
immediate threat of Greece crashing out of the euro.
But his uneasy coalition of right and left was forged on a
promise to ease the burden on a society struggling with the tax
hikes, job losses and wage cuts imposed as the price of two
multi-billion-euro bailouts since 2010.
Samaras says the harsh austerity is only choking the Greek
economy and delaying recovery.
The euro zone says the programme can be adjusted to take
account of weeks of political paralysis during elections in May
and June and the deeper than expected recession. However,
lenders led by Germany, the biggest contributor to the bailout,
have ruled out any radical changes.
Last week's EU summit raised Greek hopes that it might win
concessions similar to those granted to Spain, particularly the
direct recapitalisation of banks from EU rescue funds. In
Greece's case, direct recapitalisation would cut about 50
billion euros ($64 billion) from the national debt.
But in a newspaper interview on Sunday, Asmussen said there
should be no illusion that the summit's conclusions would change
things for Greece. He cautioned on Monday that granting the
country more time would only cost more money.
"Delaying adjustment is risky," he said. "And it is also not
free." Asmussen, a former adviser to German Chancellor Angela
Merkel, later met Greece's outgoing and incoming finance
ministers, saying afterwards only that they had a "good first
Cabinet ministers gathered at the finance ministry to
prepare for the troika visit and were expected to meet Samaras,
who is recovering from eye surgery, later in the day.
Underscoring the scale of Greece's problems, a survey
released on Monday showed a manufacturing slump worsened in June
between the two elections, leading to sharp drops in production
Markit's manufacturing purchasing managers' Index (PMI) for
Greece dropped to 40.1 points last month from 43.1 in May, its
weakest reading since February's record low of 37.7 points and
well below the 50 mark that divides growth from contraction.
"Whether the formation of the new coalition government helps
to improve confidence remains to be seen," said Markit senior
economic Paul Smith. "There can be no doubting that fundamental
problems facing manufacturers - and for that matter the Greek
economy as a whole - are inevitably going to take a long time to
Looking to cut its losses, France's Credit Agricole
was in talks with at least one bank to sell all or
part of its struggling Greek unit Emporiki Bank. Greece's
biggest bank, National Bank, said in a statement to
the stock exchange that it was in talks over a "strategic
alliance" regarding Emporiki.
A Credit Agricole spokeswoman declined to comment, but a
Paris-based source familiar with the matter said there were a
number of suitors for Emporiki, which has cost Credit Agricole
billions of euros in capital in recent years.