ATHENS (Reuters) - Greece’s finance minister said on Wednesday that his country had been given more time by its international lenders to implement austerity cuts, an assertion played down by leading European Union officials.
European paymaster Germany said the EU would only decide on the matter after receiving a report on Greece’s progress from the ‘troika’ of lenders - the European Commission, the European Central Bank (ECB) and the International Monetary Fund - while ECB President Mario Draghi said no final decision had been made.
But Greek Finance Minister Yannis Stournaras said the delay had already been agreed and that a package of austerity measures would be put to parliament next week - even though junior coalition partners have refused to back some of the proposals.
After months of wrangling on the 13.5-billion-euro package of spending cuts and reforms, he said the near-bankrupt country had won additional concessions from its lenders and had largely wrapped up talks on the plan.
The EU and IMF lenders, however, said some issues were still outstanding, despite progress in recent days.
A deal on the package is crucial for Greece’s efforts to unlock more aid under its latest bailout, with the country just three weeks away from running out of cash.
“Today, we obtained the extension,” Stournaras told parliament, referring to being given an additional two years to hit bailout targets, something Athens has been lobbying for.
“All the scenarios that we are working on with the (international lenders) are based on the assumption of an extension,” he said.
An earlier Reuters report cited a draft agreement between Greece and the troika that specified Athens will have until 2016 rather than until 2014 to hit its budget deficit targets.
Speaking in Berlin, Draghi said: “The review is not yet finished. I understand progress has been made, but some parts need to be defined.”
German Finance Minister Wolfgang Schaeuble stressed the need for Greece to fulfill its bailout terms.
But he added: ”If the troika should come to the conclusion that there are objective things that the Greeks cannot change on their own and if it makes suggestions for how to solve this, then we will consult on that in the German Bundestag (lower house of parliament) and decide on them accordingly.
Even if Greece strikes a deal with lenders abroad, it faces a difficult battle at home.
Prime Minister Antonis Samaras’s allies - the PASOK Socialists and the small Democratic Left party - have yet to back the austerity package, with the smaller party refusing to budge on its stance despite the latest concessions from lenders.
Both parties have refused to support demands by foreign lenders to cut wages and reduce severance payments, but have maintained that they do not want to jeopardize the government or Greece’s place in the euro zone.
Stournaras urged the parties to change their stance, citing new concessions the government had eked out overnight.
“This morning, after an all-night effort, the troika backed down on two main issues - severance payments and the notice period required before a layoff,” Stournaras told parliament.
“To a great extent, the negotiations have been completed. But even now, we are trying for improvements.”
But that failed to impress Democratic Left.
“As things stand, my position remains unchanged,” party chief Fotis Kouvelis told Reuters.
The package will be put to parliament next week in two separate bills on austerity cuts and labor reforms, he said. The separation is designed to ensure that the austerity cuts will pass even if Democratic Left votes against the labor reforms, Greek officials said.
The party commands only 16 deputies in the 300-seat parliament, meaning the bills could still pass without its support.
But if it did vote against, the already fragile coalition’s stability could be undermined, and questions could be raised about the government’s commitment to reform.
Stournaras openly raised the issue of inflicting losses on Greece’s official sector lenders by saying it was trying cut its debt mountain by asking for lower interest rates and an extension of maturities on its bailout loans.
Greece’s debt was already cut by 106 billion euros earlier this year under a deal that imposed losses on private-sector bondholders. But with its economy mired in its deepest postwar recession, and tax and privatization receipts sluggish, there is a growing sense that Greece will need additional debt relief.
Additional reporting by Harry Papachristou, Renee Maltezou and Karolina Tagaris; Writing by Deepa Babington; Editing by Kevin Liffey