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Greece, EU/IMF lenders said to agree on key labor reforms, pension cuts

RENEE MALTEZOU & LEFTERIS PAPADIMAS

TAGS: Politics, Economy, Finance, EU

Greece has agreed with its lenders on key labor reforms, spending cuts and energy issues, moving closer to clinching a deal before a meeting of eurozone finance ministers on April 7, sources close to the talks said on Wednesday.

A spokeswoman for the European Commission said the EU executive could not confirm the report.

Negotiations between Athens, the European Union and the International Monetary Fund – which has yet to decide if it will participate in Greece's current bailout – have dragged on for months, rekindling fears of a new crisis in Europe.

The latest progress is expected to help allow the return of EU and IMF mission chiefs to Athens in the coming days to finalize details with Greek finance and labor ministers before the Eurogroup meeting in Malta.

Talks are now held through teleconferences.

The main focus of the talks has been pension cuts, energy and labor reforms. Athens agreed last month to adopt more measures, worth 2 percent of GDP, to help convince the IMF to participate in the bailout, which is sought by EU countries including Germany.

Greece will cut pensions by up to 1 percent of GDP in 2019, two officials told Reuters on condition of anonymity. Lowering the tax-free threshold to save roughly another 1 percent of GDP has also been agreed, an EU official said.

"I believe there will be a staff level agreement by the April 7 Eurogroup," one of the officials said.

On labor reforms, Greece will not be forced to ease present restrictions on collective redundancies initially sought by the IMF, another official said.

Collective bargaining, which was weakened as part of bailout reforms in 2012, is expected to be revived after the country's current bailout program expires in 2018. Greece and lenders are still negotiating other labor issues.

Slashing the market share of state-controlled Public Power Corp through the sale of lignite units, has also been agreed, another official said. However, an energy ministry official said the issue was still under discussion.

Any PPC move to sell assets is likely to stir controversy, and labor unions have already warned of industrial action if it goes ahead. Energy Minister George Stathakis was due on Friday to tour northern Greece, where PPC is a big employer.

Greece is likely to start legislating for the reforms agreed once the deal is sealed and as early as next week.

Greece hopes that wrapping up the second review of bailout progress will pave the way for crucial talks on post-bailout debt relief. Finance Minister Euclid Tsakalotos has said debt restructuring would help the country return to markets before its bailout expires.

Earlier, a spokesman for the European Stability Mechanism, the eurozone's bailout fund, said that possible additional debt relief measures for Greece could be decided only at the end of the bailout program.

[Reuters]

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