Greece wins more time for austerity cuts - Financial Post

ATHENS ? Greece?s finance minister said on Wednesday that his country had been given additional time by its international lenders to impose its austerity cuts, an assertion played down by leading EU officials.

European paymaster Germany said the EU would only decide on the matter after receiving a report on Greece?s progress from the ?troika? of lenders ? the European Commission, European Central Bank and the International Monetary Fund.
ECB President Mario Draghi said no final decision had been made.

Greek Finance Minister Yannis Stournaras, however, said the delay has been agreed and that a new package of austerity measures would get a parliamentary vote next week.

After months of wrangling on a package of spending cuts and reforms, he said the near-bankrupt country had won additional concessions from its lenders and largely wrapped up talks on the package.

?Today, we obtained the extension,? Yannis Stournaras told parliament, referring to being given an additional two years to hit bailout targets, something Athens has been lobbying for.

?All the scenarios that we are working with the (international lenders) are based on the assumption of an extension,? he added.

An earlier Reuters report cited a draft agreement between Greece and the troika. It specified that Athens will have the four years through 2016 rather than 2014 to hit its budget deficit targets.

Speaking in Berlin, Draghi said: ?The review is not yet finished. I understand progress has been made, but some parts need to be defined.?

Stournaras said he would tell eurozone colleagues meeting on Thursday that the package was ready to be put to the Greek parliament next week. In the meantime, Greece was still seeking further concessions from its lenders on the 13.5 billion euro package.

?To a great extent, the negotiations have been completed,? Stournaras said. ?But even now, we are trying for improvements.?

A deal on the package is crucial for Greece?s efforts to unlock more aid under its latest bailout, with the country just three weeks away from running out of cash.

ALL NIGHT EFFORT

The domestic battle in Athens was not over.

Prime Minister Antonis Samaras?s allies ? the small Democratic Left party and the PASOK Socialists ? have yet to back the austerity package, and will examine the concessions made before deciding their stance, a party official said.

Both parties have refused to support demands by foreign lenders to cut wages and reduce severance payments, but have maintained that they do not want to jeopardise the government or Greece?s place in the eurozone.

Stournaras urged the parties to change their stance, saying the government had eked out more concessions from lenders.

?This morning, after an all-night effort, the troika backed down on two main issues ? severance payments and the notice period required before a layoff,? Stournaras told parliament.

The package will be put to parliament next week in two separate bills on austerity cuts and labour reforms, he said. That was aimed at ensuring the austerity cuts are passed in parliament even if the Democratic Left party voted against the labour reforms, Greek officials said.

Stournaras also openly raised the issue of inflicting losses on the country?s official sector lenders by saying Greece is trying cut its debt mountain by asking for lower interest rates and an extension of maturities on its bailout loans.

Athens? debt was already cut by 106-billion euros earlier this year under a deal that inflicted losses on private-sector bondholders.

But with its economy mired in its deepest postwar recession and sluggish privatisation receipts, there is a growing sense in Europe that Greece will need additional debt relief to meet its bailout targets.

Greek debt soared to 171% of GDP last year from 148% in 2010 and EU officials privately acknowledge it is likely to widely overshoot a target to bring its debt down to 120% of gross domestic product by 2020.

Last month, Greek Deputy Finance Minister Christos Staikouras had said that Athens may ask the European Central Bank to roll over some of the 50-billion euros worth of Greek bonds it holds.

Officials in Athens have also proposed that their country?s banks should be recapitalised directly from Europe?s bailout fund ? a move that would automatically wipe out about 50-billion euros from Greek books.

? Thomson Reuters 2012

Source: http://business.financialpost.com/2012/10/24/greece-wins-more-time-for-austerity-cuts/

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