ATHENS Greece and its international lenders resume talks to unlock 8.1 billion euros ($10.5 billion) of rescue loans on Monday after a two-week break in which the government almost collapsed over bailout-related firings at state broadcaster ERT.
Greek officials including Prime Minister Antonis Samaras have said they expect the talks to conclude successfully, despite setbacks to the country's privatization program and delays in public sector reform.
The stakes are high. If the talks fail, the IMF might have to withdraw from Greece's rescue to avoid violating its own funding rules. Athens also needs the cash to help redeem about 2.2 billion euros of bonds in August.
The installment is one of the last big cash injections Athens stands to get under its 240-billion euro bailout which expires at the end of 2014.
Finance Minister Yannis Stournaras will have his first meeting with representatives of the European Union, the European Central Bank and the International Monetary Fund, also known as the "troika", at 10 a.m. ET.
Samaras wants to wrap up the talks quickly for the funds to be released by the end of this month. He appointed two ardent reformers, Kyriakos Mitsotakis and Adonis Georgiadis, in a cabinet reshuffle last week to push for reforms at key ministries, civil administration and health.
"The lenders will give us trouble but less so than in previous reviews," one government aide told reporters on Sunday.
The government plans to ask creditors to lower this year's privatisation target of 2.6 billion euros after failing to find a buyer for natural gas company DEPA. [ID:nL5N0EN16J]
Athens has also missed a June deadline to place 12,500 state workers into a so-called "mobility scheme", under which they are transferred or dismissed within a year.
A shortfall of more than 1 billion euros has emerged at state-run health insurer EOPYY, meaning automatic spending cuts may have to be agreed to bring it on an even keel.
Athens and the troika are also at loggerheads over an unpopular property tax and over a possible reduction in a consumption tax for restaurants.
Samaras has ruled out imposing new austerity measures after losing a coalition partner in the ERT crisis, with his majority in the 300-seat parliament shrinking to just three votes.
More measures will be impossible to steer through parliament, analysts and lawmakers have said, after four years of austerity which plunged Greece into its deepest peace-time recession with the jobless rate at a record 27 percent.
The economic crisis has also boosted support for anti-bailout parties such as the ultra-right Golden Dawn.
According to Greek officials, the country has enough spare cash to offset any short-term slippages in the bailout plan.
Helped by tight spending, the budget deficit was about 3 billion euros smaller than expected in January-May, Stournaras said last week, adding that the country had also money left over in bank rescue fund HFSF. [ID:nL5N0F13HX]
But even if it clears the ongoing troika review, Athens will require additional help to stand on its own feet after the current bailout expires at the end of 2014.
According to provisional EU/IMF estimates for 2015-2016, Greece must plug a budget shortfall of about 4 billion euros and a funding gap of up to 9.5 billion. These estimates are to be updated later this year.
The euro zone has already pledged to shave off part of Greece's debt to make it sustainable in the long term. But it is still unclear how much debt will be written off and how.
($1 = 0.7693 euros)
(Editing by Gareth Jones)