Stournaras says Greece might need 10 bln euros in third package as gov’t pushes civil service reforms

Finance Minister Yannis Stournaras indicated Monday that a possible third foreign rescue program for Greece would probably comprise some 10 billion euros while Prime Minister Antonis Samaras and key ministers met to discuss an overhaul of the civil service, a key condition in the country’s current rescue program.

Administrative Reform Minister Kyriakos Mitsotakis said authorities signed off on the induction of 12,500 civil servants into a so-called mobility scheme by the end of next month. But sources said hurdles remained, partly due to the slow progress of a scheme aimed at evaluating staff.

Also there was some hesitation on the political level with Samaras’s coalition partner, PASOK leader Evangelos Venizelos, emphasizing the need for a mobility scheme – where staff are put on reduced pay ahead of their transfer or dismissal – being dissociated from sector layoffs, which the government has also promised.

Troika mission chiefs are expected to seek an update on delayed civil service reforms when they return to Athens at the end of next month, probably after elections in Germany.

Greece’s debt problems have dominated the German election campaign since German Finance Minister Wolfgang Schaeuble said last week that a third aid package for Greece is inevitable while ruling out a new debt haircut.

Stournaras insisted in comments in the German newspaper Handelsblatt Monday that Greece will not need a second haircut. He added, however, that there were “several options” for relieving Greece’s debt burden, either by lowering interest rates on existing loans or extending the repayment period. Greece will need another 10 billion euros for 2014 and 2015 though, Stournaras said, referring to an estimated funding gap of about that size for 2014 and 2015.

The minister echoed comments he made to Proto Thema newspaper on Sunday, according to which a third bailout for Greece “would be in the order of 10 billion euros” but would not be linked to extra austerity measures.

European Energy Commissioner Guenther Oettinger also estimated a likely third package for Greece at 10 billion euros, while Markus Ferber, the head of the German Christian Democrats’ group of Euro deputies, interpreted Stournaras’s statements as referring to “an investment package.”

A spokesman for Germany’s Finance Ministry, Martin Kotthaus, remarked simply that the funding for the current program was secured.