Troika still considering other options

The deeper-than-expected recession and the government?s inability to collect ordinary revenue and implement structural changes sent the budget deficit 4.57 billion euros higher than the target in the January-July 2011 period.

This negative development is considered to have prompted Greece?s international bailout creditors — the International Monetary Fund, the European Union and the European Central Bank, collectively known as the troika — to press for the harder measures announced by the government on Wednesday, namely making the emergency property tax announced some 12 days ago permanent, lowering the tax-free income threshold from 8,000 to 5,000 euros and the urgent transfer of about 30,000 public sector workers to a labor reserve scheme.

According to Finance Ministry data released on Thursday, net revenues were 3.5 billion euros off target and expenses 1 billion higher. As a result, the deficit shot up 22 percent to 18 billion euros year-on-year in the first eight months. And the yearly targets seem unattainable, as the remaining sum for collection is 5.8 billion per month, when monthly inflows vary between 3.7 and 4 billion euros.

Sources say the troika is still expressing doubts about the government?s intentions to fully implement the measures heralded. Its officials say they will wait for more details on the measures next week, as the announcements referred to measures already agreed to in the midterm program last July.

?We are taking note of the government?s announcements… they will be examined in detail by the troika when it returns to Athens,? said European Commission spokesman Olivier Bally. ?The aim is for talks to resume in Athens next week but we shall see if this is realistic.?

The head of the Commission?s special task force for Greece, Horst Reichenbach, told Germany?s ZDF TV channel on Thursday that, ?in talks with Greek ministers last week I found strong will for a real implementation of reforms and not just on paper.?

Separately, the IMF?s Managing Director Christine Lagarde said in Washington on Thursday that Greece could not be allowed down the path of disorderly default, like Argentina, as eurozone members were committed to supporting each other.

?The program is difficult. Negotiations with Greece focus on the need for any measures to ensure lighter burdens for the underprivileged,? she said.

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