Troika raises doubts over 2.2 bln euros worth of measures [update]

Prime Minister Antonis Samaras sought on Monday to bridge differences with the country’s lenders over a near 12-billion-euro austerity package, after they expressed skepticism over parts of the plan that Greece hopes will unlock further aid payments.

“Talks with the troika will continue,» Finance Minister Yannis Stournaras, who took part in the meeting,» told journalists without elaborating further.

No details were made available immediately after the meeting which took place ahead of the Greek prime minister’s meeting with European Central Bank chief Mario Draghi in Frankfurt on Tuesday.

Greece’s foreign lenders have reportedly raised doubts about some 2.2-billion-euros worth of measures contained in a nearly 12-billion-euro austerity package prepared by the government.

The objections put forward by the so-called ?troika? of inspectors from the European Commission, the European Central Bank and the International Monetary Fund concern three main areas, namely expenses in the public sector, defense spending, and health costs.

Among the demands being made by the troika is a further streamlining of the public sector, which would include 150,000 sackings by 2015 ? something that all partners in the coalition government have painstakingly tried to avoid.

Troika officials returned to Athens on Friday to conclude a report on debt-hit Greece’s progress in meeting the terms of its latest bailout. The inspectors, who held talks with Stournaras on Sunday after a month-long hiatus, must approve the plan to trim roughly 11.7 billion euros from the state budget over the next two years if Athens is to get a green light for the bailout money it needs to avoid bankruptcy.

Sources inside the finance ministry said that visiting officials expressed doubts about whether the government can live up to its prediction of slashing administrative costs in the public sector by 750 million euros.

Similarly, they were skeptical of forecasts to cut 911 million euros in health spending and social security expenditure. Additionally, the troika has doubts that a proposed 517-million-euro reduction in defense spending would be a permanent measure rather than simply a bid to put off the expenditure for now.

The austerity package, which Samaras has yet to convince his socialist allies in the coalition government to accept, contains a fresh round of unpopular wage and pension cuts for the next two years including 7.3 billion euro cuts in pensions, civil servant salaries, benefits and tax breaks.

The package also includes 4.5 billion euro cuts in the state budget for health, education, defense, local administration, public utilities and administrative spending across Greece’s ministries.

More specifically, the proposed measures include the abolition of the extra Christmas and Easter payments in the 14-month pay packet, which have already been significantly reduced.

They also include graded reductions between 2 and ten percent for all pensioners who receive more than 1000 euros in primary as well as auxiliary monthly pensions.

Furthermore, the package calls for some 700 million euro cuts in the pensions of civil servants who used to be on so-called ?special salaries? — such as judicial and military staff. Pay cuts to special salaries are set to apply to this year as well, and will be retroactive. Beginning with paychecks in July, they are expected to save some 600 million euros per year.

Reductions between 22 and 35 percent in the so-called ?efapax,? the lump-sum payment all workers get upon retiring, and 940 million euro cuts in welfare benefits are also called for.

Greece faces bankruptcy and a potential eurozone exit without the next tranche of aid, an issue that its peers in the European Union are expected to decide on next month.

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