Greek Prime Minister Antonis Samaras’ hopes to get his reluctant coalition partners to go along with $14.6 billion in additional cuts demanded by international lenders – and for Greeks to believe his promise that another round of austerity measures would be the last – have been hit by reports that the country’ shortfall could be as high as $26 billion, and that even more pay cuts, tax hikes and slashed pensions will follow.
That estimate reportedly came from inspectors of the Troika of the European Union-International Monetary Fund-European Central Bank, (EU-IMF-ECB,) the German news magazine Der Spiegel reported. Germany is the EU’s biggest contributor to $325 billion in two bailouts to Greece.
The Troika is withholding a $38.8 loan installment, the last in a first series of $152 billion in rescue loans, and has delayed a second bailout of $173 billion until Samaras makes spending cuts and imposes more pay cuts, tax hikes and slashed pensions. But the Troika report showed that the second bailout may be far short of what’s needed to keep the country afloat.
The austerity measures have largely backfired, worsening a five-year recession, putting nearly two million people out of work, shuttering 68,000 businesses and shrinking the economy by 7 percent, and Samaras has publicly stated that he’d like a two-year extension to meet fiscal targets to reduce the country’s deficit from 9.3 to 3 percent. The Troika wants that done by 2014, and he has not directly asked for more time.
With protests and strikes already underway, and with a massive general strike set for Sept. 26 by the country’s two largest labor unions, representing public and private workers, Samaras has planned to give a nationally-televised address to appeal to Greeks to accept more sacrifice, but that is based on current shortfall estimates, and if they are worse, he could be pressed by the Troika to deliver more.
Der Spiegel also reported that Samaras has asked a number of times whether the Troika would be willing to write off part of the country’s debts so Greece would not have to repay all the loans. A former government imposed 74 percent losses on investors to reduce the debt by $134 billion.
With so much at stake – including whether a Greek default could push the country out of the Eurozone and threaten the 17-country financial bloc – the magazine said that the EU wants a decision on whether to release more aid before an Oct. 18 meeting, while Germany believes it should be put off until November at the earliest.
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