Troika sticks to its guns in austerity talks

Government officials resumed tough talks with troika officials on Monday as a draft budget for next year, outlining 7.8 billion euros in spending cuts and savings, was submitted to Parliament.

Troika chiefs emerged wordless from a two-hour meeting with Finance Minister Yannis Stournaras, who simply noted the officials had sought clarifications on a 13.5-billion-euro austerity package proposed by the coalition government.

A subsequent meeting between Prime Minister Antonis Samaras and troika chiefs finished in just 35 minutes, prompting speculation that the negotiations had stalled, reports that sources close to Samaras rebuffed. Kathimerini understands that Samaras telephoned European Commission chief Jose Manuel Barroso and European Council leader Herman Van Rompuy last night in a bid to start drumming up political support, reports that were also played down.

Samaras is reportedly concerned about a rift between Germany and the International Monetary Fund regarding the problem of Greek debt.

His aim is to wrap up the talks with the troika this week, which would allow Stournaras to present the agreement at next Monday?s Eurogroup in the hope that a decision can be taken on the release of a crucial 31.5-billion-euro rescue loan at the EU leaders? summit on October 18.

The fact that several sticking points remain in talks with the troika, including over the proposed suspension of 15,000 civil servants which the two junior partners in the coalition vehemently oppose, suggests that a deal within the next few days is unlikely, putting the whole process back.

Kathimerini understands that the troika has queried the enforceability of some 2 billion euros in proposed measures — chiefly cuts to the health, defense and local authority funding.

The cuts in the draft budget for 2013 include 3.8 billion euros to pensions, 1.1 billion to civil servants? salaries, around 800 million to social welfare benefits and 1.2 billion euros to state spending on health, defense and local authority spending. The draft, which will be significantly revised, foresees the economy contracting by 6.5 percent this year and 3.8 percent next year while unemployment is set to rise to 24.7 percent from 23.5 percent this year. It also predicts a primary surplus of 1.1 percent of gross domestic product next year following a row of deficits since 2002.