NEWS

Gov't pledges to shrink state, denies referendum report

By Ingrid Melander

Greece promised to shrink its bloated public sector on Tuesday ahead of a second conference call with the EU and the IMF, in a bid to convince them to pay out funds despite repeatedly missing the targets of its bailout deal.

Government officials said a first call on Monday had been ?productive and substantive? and they expected to clinch the release of an 8 billion euro ($11 billion) aid tranche that it needs to avoid running out of cash next month.

But international lenders are running out of patience with Athens, increasing pressure on the country to deliver on pledges to slash its deficit even as the economy heads towards a fourth year of recession.

?Our primary target is to shrink the state,? deputy government spokesman Angelos Tolkas said on NET radio. ?The Greek state budget has stopped paying the wages of some 200,000 civil servants in the last two years. And we are continuing.? Finance Minister Evangelos Venizelos will discuss austerity plans with EU and IMF inspectors at 1700 GMT, his office said.

He has pledged to take on as much austerity as needed to avoid a default that would likely trigger deeper turmoil on already shaky global markets and push other indebted countries in the euro zone periphery closer to the brink.

Officials close to the so-called troika of the EU, IMF and European Central Bank said Greece still had work to do before the call, including fleshing out details of how to prevent slippage from next year?s budget deficit target of 6.5 percent of annual output.

European stocks rose on Tuesday as investors looked for bargains after fears that Athens was close to default hit global markets on Monday. The rise happened despite Standard

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