Even as the shaky coalition government led by Prime Minister Antonis Samaras is having trouble finalizing some 11.5 billion euros, or $14.16 billion in cuts demanded by international lenders in return for rescue loans, another $3 billion in savings may be required to meet fiscal targets, the German magazine Der Spiegel has reported.
The magazine cited an interim report by the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that said the additional cuts are needed to bring the country’s deficit below 3 percent from 9.3 percent now by the end of 2014.
The unexpected gap was because the government has fallen far behind in plans to privatize state entities and sell or lease state properties. The Troika, which is ready to disburse a $38.8 billion loan installment that is the last in a first rescue package of $152 billion, said it could withhold a second bailout for $173 billion if Greece does not impose more austerity and reforms, although the pay cuts, tax hikes, and slashed pensions that came with the aid have crippled the economy.
Troika insepctors were in Athens last month and are due to return after the government produces its report on how the first round of cuts is to be made, although Greek media has reported it will come in yet another round of austerity aimed at workers, the poor and pensioners.
“The delegation also criticized in its interim report that Prime Minister Antonis Samaras government had already been unable to explain how the savings of 11.5 billion euros should be reached,” Der Spiegel reported. “Roughly a third is uncovered.” The government said it’s getting closer to finalizing the cuts, but a rift has developed in the coalition.
New Democracy Conservative leader Antonis Samaras, who has waffled on whether to ask for more time to impose reforms, is pushing his reluctant partners, the PASOK Socialists and Democratic Left to go along with what the Troika has ordered. Samaras this week will meet Jean-Claude Juncker, head of the Eurozone of the 17 countries using the euro as a currency, and then travel to talks with German Chancellor Angela Merkel and French President Francois Hollande to make his case that Greece is doing all it can, although the government has failed to meet the privatization schedule nor gone after tax evaders costing the country $70 billion.
The Greek Finance Ministry has prepared a report that claims the economy could recover more quickly if austerity measures were eased and the government had two more years to meet the tough targets set by the Troika, although that would require yet another bailout. There is a clause in the second bailout that says the deficit adjustment period can be extended if the ongoing recession is deeper than expected. Greece’s economy is set to shrink 7 percent this year.
(Sources: Reuters, Kathimerini)
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