Troika sees ‘great progress’ in talks on cuts [UPDATE]

A three-hour meeting between government ministers and officials representing the country’s international creditors — the European Commission, European Central Bank and International Monetary Fund, known as the troika — ended on Sunday with the IMF envoy Poul Thomsen saying there had been «great progress» in finalizing a package of 11.5 billion euros in budget cuts for 2013 and 2014, Skai reported.

“The meeting went well. We made great progress. We will take a break and come back in early September,» Thomsen was quoted as telling reporters after the meeting with his counterparts from the EC and ECB, Finance Minister Yannis Stournaras and Labor Minister Yiannis Vroutsis.

Finance Ministry sources indicated that the talks had gone «very well» and had focused on the measures to be taken this year to cover a budget shortfall as well as the savings for 2013 and 2014. The aim is for the measures for this year to be finalized by the end of the coming week while the package for the next two years will be developed over the coming weeks and finalized in early September in time for a scheduled Eurogroup summit on September 3, the sources said. There are no concerns about a 3.2-billion-euro bond that expires on August 20, the sources said, noting that Eurogroup Chairman Jean-Claude Juncker had said a solution will be found to cover the bond.

The envoys were to leave Athens on Sunday, allowing ministry officials to finalize the measures over the coming weeks and to announce them in September.

According to sources, the package includes reductions to auxiliary pensions, to lump sums paid on retirement and to social benefits. The retirement age is to increase to 66, from 65, while low-level pensions are expected to be trimmed by up to 6 percent. Also, the operational spending of ministries is to be cut more than originally planned.

Before the meeting, Skai understands, the envoys provided government officials with a document setting out specific proposals for measures. Government officials reportedly agree with many though not all of the proposals.

Prime Minister Antonis Samaras and his coalition partners, socialist PASOK leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis, are to meet at 4 p.m. on Monday, and then again at 6 p.m. on Tuesday, to discuss the outlook for privatizations and the merging of state organizations.

Agreeing the details of the budget savings for 2013 and 2014 is one of the goals the government is aiming to achieve in the next few weeks in order to secure a positive review from the troika and subsequently clinch the next tranche of rescue funding. The government must also implement 3 billion euros in fiscal measures due this year and move forward with structural reforms and privatization.