Only some 6 billion of the 11.5 billion euros in spending cuts proposed by the Greek government has been accepted by the troika, which is pressing for public sector sackings as one of the policies Athens should turn to in order to make up the shortfall.
Representatives of the European Central Bank, the European Commission and the International Monetary Fund met with Prime Minister Antonis Samaras on Monday and informed him of their skepticism about some of the coalition?s measures.
Some 2.2 billion euros worth of cuts, which include about 1.2 billion euros in savings from reductions in operating costs in the public sector and 500 million euros in savings from financing for local authorities, has been rejected outright by Greece?s lenders.
The cuts also included 437 million euros from arms programs but the troika was not convinced this would lead to permanent savings. According to sources, the troika?s refusal to accept these savings surprised the government as it had designed the savings to be of a permanent nature.
The inspectors also asked for more details about some 3.5 billion euros? worth of cuts. ?We are trying to convince them about our position. The effort continues,? said Finance Minister Yannis Stournaras.
The minister will accompany Premier Antonis Samaras on his visit to Frankfurt on Tuesday to meet ECB President Mario Draghi. Samaras will return for talks with his coalition partners in Athens on Wednesday. The three party leaders will discuss other ways to meet the troika?s target. Samaras met on Monday with the ministers of defense, administrative reform, health and interior and asked them to come up with new suggestions for savings.
A Finance Ministry source said that the troika insists that some savings should come from immediate sackings in the public sector. The inspectors argue that employees at public organizations that are closed down should be fired. The government had been hoping to avoid direct sackings through a process of voluntary redundancies and a labor reserve scheme. Sources said that the troika has also suggested cuts to low-level pensions claimed by farmers and a further rise in the retirement age by a year or two.
Stournaras is to present the updated measures to fellow finance ministers at a Eurogroup meeting in Cyprus on Friday. The eurozone ministers were expected to take a decision on the disbursement of Greece?s next loan tranche when they meet on October 8 but a European official in Brussels told Kathimerini that this would only happen if the troika has completed its progress report on the Greek program by the end of September.