Greece searches for 2.5-bln more in cuts as Moody’s adds to concern

Representatives of Greece?s troika of lenders were due in Athens on Tuesday to begin the last phase of their inspection before producing a report on Greece?s fiscal program that could decide whether the country will receive any more loans.

The government was searching for 2.5 billion euros more in savings to meet the target of 11.5 billion set by the troika fro 2013 and 2014.

The effort to finalize the 11.5-billion-euro package is broadly based on a report by the Center of Planning and Economic Research (KEPE) which recommends a range of measures, including setting a ceiling on pensions, worth an estimated total of 5.1 billion euros

The combined efforts of the various ministries added another 3 billion euros to the running total with an additional 1 billion euros reportedly scraped together in a meeting chaired by Finance Minister Yannis Stournaras on Monday.

Prime Minister Antonis Samaras is due to meet the leaders of the two other parties in his coalition government, PASOK?s Evangelos Venizelos and Democratic Left?s Fotis Kouvelis, on Thursday afternoon to discuss the cuts.

Samaras is due to meet the troika officials on Friday, a day after they hold talks with Stournaras.

The meetings come amid growing concern about a possible Greek euro exit. Ratings agency Moody’s cited late on Monday an increased chance that Greece could leave the eurozone, which «would set off a chain of financial sector shocks … that policymakers could only contain at a very high cost.”

It also warned that Germany and other countries rated ‘AAA’ might have to increase support for troubled states such as Spain and Italy that are struggling to finance their deficits.

The burden of that support would fall most heavily on the euro zone’s top-rated states, it said.

Moody’s said the outlook for Germany’s AAA credit rating is negative, the first step towards a possible downgrade.

The Netherlands and Luxembourg – both AAA rated economies – were also put on negative watch. France and Austria lost their AAA ratings earlier this year.

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