Government officials are bracing for another difficult week as negotiations on a tough austerity package with troika envoys are to resume and the tenuous stability of the three-party coalition is likely to be tested.
Finance Minister Yannis Stournaras, the key architect of a proposed 13.5-billion-euro austerity package, is expected to meet Monday with envoys of the European Commission, European Central Bank and International Monetary Fund. Troika officials are then expected to meet with Prime Minister Antonis Samaras and probably also with his coalition partners, Socialist leader Evangelos Venizelos and Fotis Kouvelis of the Democratic Left.
According to sources, there is a sense of unease within the government due to a lack of insight into the intentions of troika envoys and mixed messages from Greece’s foreign lenders. There are fears, for instance, that the troika may draw out negotiations to give Greece’s EU partners and the IMF more time to decide how to tackle the Greek problem.
There have also been some positive noises coming from Europe, with the German magazine Focus citing European Parliament sources as saying that Greece is sure to receive a much awaited 31.5-billion-euro loan tranche despite its failure to make good on economic reforms. It remains unclear however when the troika will issue the crucial report on which the release of this funding depends.
In any case, government sources indicated to Kathimerini that a final agreement on the austerity package is unlikely before the end of this week, putting back the whole process.
Meanwhile tensions are said to be simmering between the coalition partners despite their tentative agreement on the package. Venizelos has called for a decision on whether Greece is granted a two-year extension to its fiscal adjustment period to be taken in parallel to the approval of the austerity package -- a demand that is said to have riled Samaras.
Meanwhile Kouvelis is said to be on edge over the inflexible stance of the troika. It is unclear what his reaction will be if the envoys reject some of the measures and insist on immediate layoffs in the civil service.
Apart from some 4.5 billion euros in cuts to pensions, 2.3 billion euros in cuts to civil servants’ salaries and benefits and 3.8 billion euros in cuts to state spending, the package also foresees the suspension of 15,000 civil servants up to the end of 2016 and 3 billion euros in new taxes.