Tags: Sources EU | IMF Still See Gaps in Greek Debt Plans

Sources: EU, IMF Still See Gaps in Greek Debt Plans

Monday, 16 May 2011 09:39 AM

EU and IMF inspectors will tell euro zone finance ministers on Monday they are not yet happy with Greece's proposed budget steps and will return to Athens for more talks on fiscal and privatization plans, sources said.

The Eurogroup will discuss further measures Greece needs to take before getting more aid to exit a debt crisis and will give inspectors instructions on how to proceed. At stake is a new tranche of Athens' bailout loans, key for its immediate funding needs.

"We are not finished yet. We will hold more meetings when (the inspectors) return to Athens," a Greek government official who requested anonymity told Reuters.

Greece has agreed with the inspectors from the EU, the IMF and the ECB, known as the troika, that it will deliver more spending cuts and to reduce revenue targets to more realistic levels, sources said, but the inspection visit was not finished.

"We are not there yet," another source said of the talks on 2011-2015 fiscal and privatization plans Greece need to flesh out to get the next tranche of aid. "The negotiations are still going on, we haven't finalized our discussions."

The next 12 billion euro tranche of bailout aid, which is scheduled for June, is key to paying 13.7 billion euros of immediate funding needs. Failing to get it would mean default.

"On the fifth disbursement, we have done very serious work, we are optimistic that there will not be a problem," Greek government spokesman George Petalotis said on Monday.

But sources said that the inspectors would tell the Eurogroup they needed a bit more time to conclude their visit. It was not clear whether it would be concluded by the middle of the week, as initially planned.

"The troika has put in questions to the Greek authorities about how they will close the gap between what is in the fiscal plan and what is really needed, and is waiting for answers," another source told Reuters on condition of anonymity due to the sensitivity of the talks.

TOUGH TALKS

Greek officials who took part in the negotiations said these were the toughest to date, with the inspectors demanding more cuts in the state sector to lower the government's wage bill.

"These were the toughest talks we have ever had with the troika," Athina Dretta, a general secretary at the Labor Ministry told state TV Net.

"They want to make sure that the methods we are proposing (to achieve these savings) are realistic," said Dretta, whose ministry has promised to make about 7 billion euros in savings from cracking down on Social Security contribution evasion.

Sources said one of the problems was that there was not enough coordination within the government, with measures presented as a saving by one ministry sometimes appearing, at least partially, as a cost at another ministry.

Greek government sources told Reuters last week the inspectors were pressing Athens to cut public spending further to make up for a likely shortfall in revenue and to set up more realistic revenue targets in the future.

"We have discussed it and it (the revenue target) has been reduced," one source said. "We have seen in the past measures do not necessarily yield what the government hopes for."

Greece has acknowledged it may not be able to return to bond markets next year and investors fear a restructuring, imposing losses on private bondholders, is inevitable without more aid.

Officials reiterated the inspectors had not discussed any additional bailout and first wanted to wrap up talks on the 2011-2015 fiscal plan, which is key to assess whether Greece is meeting the targets set by the 110 billion euro plan agreed last year to avoid a Greek default.

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EU and IMF inspectors will tell euro zone finance ministers on Monday they are not yet happy with Greece's proposed budget steps and will return to Athens for more talks on fiscal and privatization plans, sources said. The Eurogroup will discuss further measures Greece...
Sources EU,IMF Still See Gaps in Greek Debt Plans
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Monday, 16 May 2011 09:39 AM
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