Greece’s efforts to clinch a deal with its international creditors on a package of cuts by the end of this week are under threat, with the government saying that a “fairly big” gap still separates the country from its lenders, while a fresh dispute emerged over proposed labor-market changes.
Greek Finance Minister Yannis Stournaras said the two parties are trying to find a compromise over the right austerity mix ahead of next week’s Eurozone finance ministers’ meeting in Luxembourg.
“We are trying to achieve the best possible result so that the next aid tranche is paid faster,” Stournaras told reporters after a meeting with Prime Minister Antonis Samaras.
He was referring to a delayed $38.8 billion loan installment from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that is on hold – along with a second bailout of $172 billion – until an agreement is reached with the government to make another $17.4 billion in cuts and tax hikes.
The latest dispute—over cuts to workers’ benefits—comes just days after inspectors rejected $2.58 billion of planned spending cuts and tax measures, raising concerns in Athens that an agreement on the package won’t be reached ahead of the Eurozone meeting. The uneasy coalition government headed by Samaras was hoping that the finance ministers would sign off on the deal and release the next installment, without which Greece won’t be able to pay workers and pensioners.
Government officials now say that Europe might hold an extraordinary summit in November to approve the aid installment and the second bailout, more than $64 billion of which will go toward recapitalizing the country’s banks which are strapped for cash after a former government imposed 74 percent losses on bond holders, including the country’s financial institutions.
Greece has enough cash reserves to last until the end of November. But further delaying the cash injection to the banks is starving the economy of much-needed liquidity. A further delay in the aid disbursement also means the government won’t be able to start paying off some €7 billion it owes private-sector contractors.
(source: dow jones)
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