Prime Minister Lucas Papademos is expected to address the nation in the next few days in a bid to explain how crucial a juncture Greece finds itself at as the government prepares to agree on a new set of measures aimed at reducing its huge deficit.
Sources said that Papademos will make the address ahead of attempts to coordinate his ministries on the issue of what cuts can be made in the coming months to help Greece reach the targets it has agreed with the European Commission, the International Monetary Fund and the European Central Bank.
The interim premier?s task has been made even more difficult by the fact that the 2011 public deficit is expected to come in above 10 percent of gross domestic product, rather than 9 percent. This means Athens will have to find another 2.5 to 3 billion euros in 2012.
?The danger for Greece is not over yet and the Papademos administration cannot afford to delay action on the issues it has committed to,? government spokesman Pantelis Kapsis told Skai TV.
The prime minister faces a twofold task over the next few days, which is to coordinate his ministers on the issue of what measures will be taken and to then oversee negotiations with the members of the EC-ECB-IMF team that is due to arrive in Athens on January 16 with a view to assessing whether to proceed with talks on a new, 130-billion-euro loan package for Greece.
The measures that Papademos will present to the troika of foreign lenders are likely to include a reduction in supplementary pensions, public sector sackings, slashing spending on social programs, cuts in healthcare expenditure and a lowering of defense costs.
Apart from the cost-cutting measures, Papademos?s government will also have to convince the troika that it is prepared to carry out further structural reforms. These will relate to labor regulations, the liberalization of closed professions and the privatization of some state assets.
To achieve this, Papademos will have to establish a level of harmony and cooperation between the three parties in his interim government that has been lacking so far. The clearing up of the leadership situation in PASOK might help. The party?s political council is due to meet tomorrow, when all eyes will be on Socialist chief George Papandreou, who is expected to launch a leadership contest.