International austerity inspectors pressed Greece's prime minister Friday to implement new harsh cost-cutting reforms as the country faces the alternative of losing the rescue loans that are keeping the country afloat.
International austerity inspectors pressed Greece’s prime minister Friday to implement new harsh cost-cutting reforms as the country faces the alternative of losing the rescue loans that are keeping the country afloat.
Antonis Samaras, whose conservative-led coalition came to power just over a month ago, is under intense pressure to stick to his predecessors’ austerity commitments – and find new areas to make cuts.
European Union, International Monetary Fund and European Central Bank officials – known as the troika – started a new scrutiny of Greece’s austerity program this week. If their report, expected in September, is damning, Athens could stop receiving its vital rescue loans and face a disorderly bankruptcy and exit from the euro.
The debt-crippled country has been surviving on international bailouts since May 2010. To secure them, it imposed deeply resented spending cuts, slashing incomes and salaries while hiking taxes.
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Government spokesman Simos Kedikoglou said the inspectors, who represent Greece’s bailout creditors, briefed Samaras on “the initiatives that must be taken to ensure that the national program is brought back on track.”
The hour-long meeting in Athens came a day after EU Commission President Jose Manuel Barroso exhorted Samaras to “deliver, deliver, deliver” on past Greek promises.
As part of its austerity efforts, Greece has achieved a remarkable reduction of its budget deficit from 15.8 percent in 2009 to 9.1 percent last year. However, the country is considerably off-target in other areas of reform.
Athens largely blames this on a deeper-than-anticipated recession, which could see its economic output fall by more than seven percent this year. That would bring the total economic contraction over the past five years to a crippling 20 percent – which Samaras has likened to the Great Depression in the U.S.
A political crisis sparked by fierce rivalry between the country’s main political parties stalled the reforms for three months. Politicians were only able to settle their differences and form a three-party coalition in June after two inconclusive elections.
Samaras’ government must now secure approval from bailout creditors for a (EURO)14.5 billion ($17.78 billion) package of further cost-cutting and revenue-boosting measures in 2013 and 2014. Although no details have been made public, many of the savings are expected to come from new cuts in pensions and benefits.
Greek unions have responded angrily to a series of income cuts since the crisis broke out in late 2009. The head of the main GSEE union said he and the troika officials “agreed to disagree on everything” during a meeting Friday.
“Their program has destroyed us, pushing the economy into recession and creating huge social problems, with unemployment foremost,” Yiannis Panagopoulos said.
He accused the troika of presenting themselves as doctors and “proving to be charlatans and quacks” whose treatment killed the economy.
“Were they civil servants up for assessment, they would surely be sacked,” he said.