Leaders of Greece agree on most cuts: source
By Lefteris Papadimas, ReutersATHENS--Political leaders in Greece have agreed on most of the austerity measures demanded by its creditors and are now eyeing pension and wage cuts to find the final 1.5 billion euros of savings still needed, a source close to the talks said on Sunday.
July 30, 2012, 12:39 am TWN
Greece must find savings worth 11.5 billion euros for 2013 and 2014 to satisfy its increasingly impatient lenders, who are currently visiting Athens to evaluate the country's progress in complying with the terms of its latest bailout.
A finance ministry source said the lenders, who were due to leave Athens at the end of July, would now stay until the savings plan was nailed down.
“We want to help and we will stay as long as it takes and until the plan is finalized,” IMF mission chief Poul Thomsen has told the Greek finance minister, according to a Greek official.
Prime Minister Antonis Samaras's government last week managed to draw up a list of measures to achieve those savings, but the three parties in his conservative-led administration failed to agree on them, and are due to resume talks on Monday.
“The political leaders don't disagree on anything, there are just alternative proposals being discussed to protect those with low pensions or incomes in the public sector,” said the source, who is involved in the talks. “We need measures worth 1.5 billion euros to finalize the 11.5-billion-euro package.”
Near-bankrupt Greece is fighting an increasingly desperate battle to convince skeptical European Union and International Monetary Fund lenders it has turned over a new leaf and is ready to push through long-delayed reforms to overhaul its recession-hit economy.
But the lenders have so far appeared far from convinced, and officials have told Reuters Greece is likely to require a new debt restructuring that the eurozone — faced with market turmoil in Italy and Spain as well — can ill afford.
Greek media have reported that the country's leaders are discussing possible layoffs of contractors in the public sector, a cap on pensions, cuts in welfare benefits, reductions in tax exemptions, and lower salaries for public employees as well as raising the retirement age by a year to make up the shortfall in savings.
A decision on a new tranche of aid for Greece is not expected until September, and the country's already dire financial position appears to be getting increasingly precarious.
“The fact that we have not received the agreed aid installments has put pressure on our cash reserves. Until then, we are taking extra care in managing our cash,” Deputy Finance Minister Christos Staikouras told Real News weekly.