Troika Rejects $2.58 Billion in Greek Budget Plan

With a report showing Greece will suffer a sixth year of recession in 2013 because of harsh austerity measures, envoys from the Troika of international lenders putting up $325 billion in rescue monies reportedly rejected two billion euros ($2.58 billion) in a government budget plan.
Prime Minister Antonis Samaras, after weeks of wrangling, convinced his reluctant coalition partners, the PASOK Socialists and tiny Democratic Left, to accept an austerity budget that projected 10.5 billion euros ($13.54 billion) in cuts and another 3 billion euros ($3.87 billion) in yet more tax hikes for weary Greeks.
Representatives from the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) met with Finance Minister Yiannis Stournaras and then with Samaras to go over the budget blueprint plan for 2013-14 and Greek media said they did not accept the projected savings in some areas, without identifying where they were.
Government officials told Reuters that Greece will aim for a primary surplus before debt servicing of 1.1 percent of GDP next year, from a 1.5 percent deficit in 2012, the first positive balance since 2002. But the economy will continue to shrink for a sixth year in 2013 by 3.8 to 4 percent and even that was considered optimistic because more pay cuts, tax hikes and slashed pensions are expected to take the bottom out of what’s left of consumer spending and close possibly hundreds of thousands of additional businesses.

Greece’s economic output will have declined by 25 percent since 2008 in a vicious spiral of austerity and recession that Samaras acknowledged cannot be reined in, although he was hoping for a two-year extension, to 2016, to impose more reforms, speed privatization and meet fiscal targets to reduce the deficit from 9.3 to 3 percent.
“Chances are the budget targets will be missed because of the deeper recession which the cuts will bring and the inability to meet privatization targets,” said Xenofon Damalas, head of investment services at Marfin Egnatia Bank. Troika officials were jeered by dozens of supporters of the right-wing Independent Greeks party waving Greek flags and shouting “Out with the Troika!” as the envoys entered the Finance Ministry.
The meetings came the same day that showed unemployment in Greece for those under 25 is now the highest in Europe, at 55.4 percent, while the overall rate of 24.4 percent is second, behind only Spain at 25.1 percent. Spaniards, as have Greeks, have taken to the streets in vehement protests against austerity measures and unemployment, all of which have been ignored by the governments of both countries.
Samaras had hoped to get the Troika’s approval on his plan so he could send it to the Parliament that his uneasy coalition government easily controls for a rubber-stamp approval in time for an Oct. 8 meeting of Eurozone finance ministers to consider whether to release a pending $38.8 billion loan installment, the last in a first series of $152 billion in rescue payments. A second bailout, for $172 billion, is also in limbo.