Greek Coalition Leaders Meet to Finalize New Austerity Package

Posted by in Economy

Greek coalition government partners Antonis Samaras, Evangelos Venizelos and Fotis Kouvelis meet on Thursday morning to finalize the austerity package of 11.5+2 billion euro for the years 2013-2014. While the three leaders have agreed on main cuts there are some measures that meet the objection of Venizelos (PASOK) and Kouvelis (Democratic Left), who first of all oppose lay-offs in the public sector.

Finance Minister Yiannis Stournaras briefed on Wednesday the two smaller coalition parties on the measures approved by prime minister Samaras.

According to latest information, the 30 measures to hit Greeks for one more time refer to:

€10.5 billion will come from cuts in wages, pensions, allowances, operational costs, pharmaceutical expenditure of insurance funds and increase of retirement age from 65 to 67. Open is the issue of 15,000 civil servants that could be laid-off or go to ‘labour reserve’.

€3 billion will come from tax revenues.

Greece is under time pressure to approve the package in order to receive the €31-euro bailout tranche.

Samaras will try to convince his government partners to approve the package so that he can submit it to Troika for approval. The representatives of IMF, EU and ECB are expected to arrive in Athens next Sunday.

The finalized package should be submitted to Euro zone finance ministers at the next Eurogroup meeting on October 8th, 2012.

Accoridng to the schedule, the package should be also submitted to the Parliament next week and the voting (in form of one article)  should take place as soon as possible.

Will the three agree today? Hard to tell, hard to agree.

One scenario that has been circulating lately is that with a package not meeting all Troika-imposed targets, Greece could get 80% of the bailout tranche and the rest later when it has ready the last chapter of the package.

At the same time, discussion about the sustainability of the Greek debt has risen, with the IMF to push for a further written off and the EU or better say Germany, to be willing to give Greece just a 2-year extension without additional funding.

No additional funding? Impossible! Stournaras said recently that in that case Greece would need 13-15 billion euro, while German newspapers claimed 20-30 billion euro – apparently citing Troika sources.