As government officials resumed talks on a tough austerity package ahead of the anticipated return of troika officials in coming days, Finance Minister Yannis Stournaras clarified Tuesday that a two-year extension that Greece is seeking for its fiscal adjustment period would cost between 13 and 15 billion euros.
In comments made to Reuters, Stournaras sought to curb wild speculation in the foreign press about the cost of an extension for Greece -- which Germany’s Suddeutsche Zeitung set at 30 billion euros in its report Tuesday -- and about the size of Greece’s fiscal deficit. “We estimate the funding gap that would be created if we get the two-year extension at 13 to 15 billion euros,” Stournaras said, adding that the size of Greece’s fiscal deficit was 13.5 billion euros, hence the need for 11.5 billion euros in spending cutbacks and 2 billion euros in new revenues.
Stournaras’s comments came as Christine Lagarde, the head of the International Monetary Fund -- one of the troika of Greece’s foreign lenders -- warned that further delays in the implementation of economic reforms, chiefly planned privatizations, had increased Greece’s shortfall. “As a result of the major delay in privatization, and the limited revenue revenue collection, there’s a financing gap, especially if factoring in more time,” Lagarde said in a speech to the Peterson Institute for International Economics. “We don’t only need 11.5 billion euros of cuts; we need a series of cuts and additional revenues in order to fill in the fiscal gap,” she said.
That elusive package of 11.5 billion euros in austerity measures was the focus of talks at the Maximos Mansion Tuesday between Prime Minister Antonis Samaras, Stournaras and other ministry officials.
The aim, sources told Kathimerini, was to agree on the outlines of a package that will be acceptable to the two junior partners in the coalition, PASOK leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis, so a fresh meeting of coalition leaders can be called -- and successfully conclude -- before a Eurogroup working group on Friday. When they meet, the leaders are also expected to discuss when, and in what form, the package of measures is to be submitted to Parliament.
Ahead of today’s 24-hour general strike, government sources expressed concern about industrial action in recent days, particularly by public sector employees, which has slowed down the collection of tax revenue.