adminATHENS. — Greek Prime Minister Antonis Samaras said the country can’t accept across-the-board wage and pension cuts as his government resumes talks with its creditors over the terms for keeping bailout loans flowing.Finance Minister Yannis Stournaras yesterday hosted the troika, comprising representatives of the European Commission, European Central Bank and International Monetary Fund, who are back in Athens following a five-week hiatus. As he seeks to convince them that Greece is complying with its bailout terms, one disagreement involves the extent of fiscal measures needed for Greece to achieve its budget-deficit targets.
“I don’t think there will be a conflict on this,” Samaras said in an interview on MEGA TV yesterday. “If something more is needed, we can always find structural reforms which won’t directly touch pensions and wages.”
Greece is in the sixth year of a recession that has destroyed about a quarter of its gross domestic product and sent the unemployment rate soaring to almost 28 percent, the highest in the euro area. As labour unions prepare to hold a general strike against austerity measures tied to Greece’s 240 billion euros of bailouts, Samaras has staked his credibility on avoiding more across-the-board cuts to wages and pensions.
The European Commission released updated forecasts for Greece yesterday, with its last projections in May seeing economic output expanding 0,6 percent in 2014 after shrinking 4,2 percent this year.
Samaras’s government presented a draft budget last month forecasting a surplus before interest costs of 344 million euros this year and one of 2, billion euros in 2014, or 1,6 percent of GDP.
While that would qualify Greece for additional debt relief under the terms of a year-old agreement with euro finance ministers, the country disagrees with creditors over the size of cuts needed to realise next year’s projection.
Greek officials say the 2014 fiscal gap is 500 million euros, in a worst-case scenario. They say it can be met through targeted changes to the social security system. The newspaper Naftemporiki reported on October 29 that the troika sees the shortfall at 1,2 billion euros.
A further sticking point includes the fate of two state-owned defence companies, which the troika wants closed, and progress in meeting targets for firing civil servants.
Disbursement of 1 billion euros of bailout loans agreed to by euro finance ministers in July is tied to these measures, and Kathimerini reported on October 23 the troika may delay the loan, which was due last month, until the spring. — Bloomberg.
Online Reporter