NEWS

Creditors spell out further austerity [Update]

BERLIN — Greece’s international creditors spelled out the spending cuts and reforms that Athens has to put into practise before it can receive vital bailout cash, according to a draft document obtained by The Associated Press on Tuesday.

Implementing these so-called «prior actions» is key for Greece to secure a second, 130 billion euro ($172 billion) bailout, without which it would be forced into a disorderly default on its debts by the end of March. The measures are already part of a large austerity package that lawmakers in Athens passed over the weekend amid riots and violent protests.

The scale of the demands is evidence of a growing mistrust between Greece and its creditors — over the past few years Greece has often failed to implement promised reforms and spending cuts.

This time, the country’s international creditors — the other 16 countries that use the euro and the International Monetary Fund — want to see tangible results before transferring any more money.

They are stipulating cuts worth a total of 2.6 billion euros ($3.45 billion) that need to be implemented before Greece can get the bailout cash it needs to avoid a default in March.

Included are a 1 billion euros ($1.32 billion) cut in pharmaceutical spending and a ?300 million ($398 million) reduction from the defense budget. Reducing central government and election-related spending will also reduce spending by 270 million euros ($358 million), and subsidies of 300 million euros ($398 million) to pension funds will also be slashed.

By March 20, when Greece has a big bond redemption to make, the document says the Greek government must also slash its public investment budget by 400 million euros ($530 million) «through cuts in subsidies to private investments and nationally financed investment projects.”

In addition, Greece has to find additional savings worth 325 million euros ($431 million) to meet its debt reduction targets. [The Associated Press]