As creditors push, gov’t insists it?s on track

As representatives of Greece?s international creditors emphasized the need for the government to introduce more austerity measures and achieve some form of political consensus with its rivals, Greek officials on Friday sought to play down the magnitude of the additional cuts the debt-ridden country will be obliged to make.

Government spokesman Giorgos Petalotis refuted press reports according to which envoys of the European Union and International Monetary Fund are seeking an additional 6 billion euros in cuts this year and shifted the focus to the government?s midterm fiscal program which is to be submitted in Parliament next Wednesday or Thursday.

The program – which sets out fresh spending cuts, tax increases and an ambitious austerity drive – has been one of the main focuses of visiting inspectors from the EU and IMF who are to decide on the disbursement of a fifth tranche of emergency funding to Greece.

Finance Ministry sources insisted on Friday that an additional 3 billion euros in austerity measures would be adequate for this year. Finance Minister Giorgos Papaconstantinou is due in Brussels on Monday to present his EU counterparts with a draft of the new measures.

At a press conference in Brussels on Friday, EU Economic and Monetary Affairs Commissioner Olli Rehn stressed the need for new measures but also emphasized the importance of a political consensus being reached if these new measures are to be effectively implemented.

Representatives of the EU and IMF met in Athens with officials of the main conservative opposition New Democracy party on Friday, but although the atmosphere was said to be less strained that in previous exchanges, the meeting did not yield anything concrete. ND officials insisted on their own alternative program – dubbed Zappeio 2 – as an alternative to the government?s midterm fiscal program and claimed that strife in the ranks of ruling PASOK precluded consensus.

Prime Minister George Papandreou, speaking from a meeting of center-left politicians in Oslo, indicated that the government?s biggest problem was not a lack of consensus but pressure from the markets and the media.

?Even the IMF today is saying that our debt is sustainable, we can manage our debt without restructuring. But the markets are pounding us incessantly, the media are predicting the end of the world, and this is creating a culture of fear,? he said.

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