Minister sees cuts as part of recovery

The Greek government sees the adoption of 11.5 billion euros in spending cuts for the next two years as part of a strategy to get the country out of the crisis, Alternate Finance Minister Christos Staikouras told Sunday?s Kathimeirni.

?The good scenario… is for our partners to give us a positive review, for us to receive the next installment, to complete the recapitalization of banks, to achieve the extension of the fiscal adjustment period and economic recovery,? Staikouras said in an interview.

Staikouras suggested that additional measures would probably not be needed for the time being but did not rule out further cuts next year. ?If we implement the measures that have been agreed for 2012, we will meet the fiscal targets in the memorandum,? he said. ?We believe that the measures [for 2013 and 2014] will be enough when they are combined with steps to reduce tax evasion and the recovery of the economy.?

Staikouras confirmed that Greece would issue T-bills to make up for its lack of cash reserves. ?The current situation is borderline and we expect this to continue through September, when the troika review will be completed,? he said.

Greece has a 3.2-billion-euro bond, held by the European Central Bank, maturing on August 20. The ECB, which is not accepting Greek bonds as collateral for the time being, agreed on Thursday to allow Athens to pass the 4-billion-euro monthly T-bill limit so it can raise money to pay the note and other commitments. The government intends to raise about 6 billion euros in August.

This complicates the situation for Greek banks. They were meant to reduce their T-bill holdings to 8 billion by the end of the year and 6 billion by March 2013. At the moment, they hold 14.5 billion euros of Greek T-bills.