Bloomberg News

Greece’s Coalition Government Rushes for Agreement on Cuts

August 29, 2012

Greece’s coalition government rushed to complete an agreement on an 11.5 billion-euro ($14.4 billion) package of austerity measures before the arrival of inspectors representing its international creditors next week.

While Prime Minister Antonis Samaras secured political backing for the spending cuts at a meeting with leaders of the parties supporting his government, “minor issues” still need to be resolved, Finance Minister Yannis Stournaras told reporters after the talks in Athens today. Evangelos Venizelos of the socialist Pasok party and Fotis Kouvelis of Democratic Left, the leaders attending the meeting, said the package needed to avoid across-the-board cuts in wages and pensions.

“The elaboration of the 11.5 billion euros of measures has not been completed,” Kouvelis said. “We are trying to avoid horizontal cuts, which I’m categorically opposed to, and to protect low and middle incomes so they don’t bleed any further, whether they’re from wages or pensions.”

The so-called troika of the European Commission, the European Central Bank and the International Monetary Fund will return to Athens next week to continue their review of Greece’s progress in meeting the terms its 240 billion euros of bailout loans. Without a positive review, the other countries in the euro area may not approve the disbursements of funds, which could lead to Greece’s exit from Europe’s single currency.

Complete Deal

The coalition partners will complete the measures, which are for 2013 and 2014, next week in time to present them to the troika when it arrives, Stournaras said.

Venizelos, a former finance minister, said they agreed on the need for a comprehensive plan on how Greece would resolve the crisis and that the budget deal is part of the government’s plan, which should include growth measures.

European Union President Herman Van Rompuy will travel to Athens on Sept. 7 to meet with Samaras, Proto Thema reported today, without saying how it got the information. Van Rompuy will meet with Samaras, the Athens-based newspaper said. Van Rompuy will have talks with German Chancellor Angela Merkel and French President Francois Hollande before his visit to Greece, according to the report.

To contact the reporters on this story: Marcus Bensasson in Athens at mbensasson@bloomberg.net; Maria Petrakis in Athens at mpetrakis@bloomberg.net

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net; Stephen Foxwell at sfoxwell@bloomberg.net


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