Hiatus in Troika talks with government

Finance Minister Evangelos Venizelos Friday insisted that Greece was broadly on track with crucial reforms after visiting members of the European Commission, European Central Bank and International Monetary Fund, known collectively as the ?troika,? left Athens unexpectedly before issuing a report saying that the government had made ?good progress? but needed more time to complete ?technical work.?

In spite of the reassurances though, sources said Friday that Venizelos was today scheduled to hold emergency talks with Prime Minister George Papandreou, who returned to Athens Friday from a crisis group meeting on Libya in Paris. The talks between Venizelos and Papandreou are expected to focus on how the government can plug a shortfall of 1.7 billion euros without resorting to further tax hikes. Papandreou is also expected to speak with top-ranking EU officials including European Council President Herman Van Rompuy and European Commission Chairman Jose Manuel Barroso about Greece?s spiralling debt problems. The premier is then to address PASOK members at an annual gathering where he is expected to defend his Socialist party?s controversial policies as unavoidable.

On Friday, Venizelos refuted swirling local media reports of a rift with visiting auditors over the country?s ability to meet deficit reduction targets. The reports, Venizelos said, ?lacked any bearing on reality.? The troika, too, issued a statement suggesting that negotiations had not been derailed. ?The mission has made good progress, but has temporarily left Athens to allow the authorities to complete technical work, among other things, related to the 2012 budget and growth-enhancing structural reforms,? the statement said.

The talks with the inspectors, which ended in the early hours of Friday, had been ?very friendly and constructive,? Venizelos said, noting that the auditors would return to Athens on September 14 for a second phase of negotiations once the government has finalized a draft of the national budget for 2012.

There had been no previous indication that there would be a break in negotiations with the inspectors, whose previous audits have lasted two weeks.

Venizelos said that he had reiterated to the troika that a deeper-than-expected recession — of around 5 percent — would necessitate ?some additional elaboration to ensure there is no divergence? from deficit reduction targets. The minister said the auditors had not pressed for new austerity measures.

?The emphasis is on enforcing the measures that have already been voted through Parliament,? he said.

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