Business World

Wednesday 28 June 2017

Greek finance minister makes new cuts to qualify for €8bn tranche of bailout

EURO CRISIS

Laura Noonan

Laura Noonan

GREEK Finance Minister Evangelos Venizolos will today outline a range of austerity measures to officials from the IMF and the EU in a bid to convince them that Athens deserves the next €8bn tranche of its bailout.

The conference call between Mr Venizolos and senior officials from the troika followed a cabinet meeting yesterday, where Prime Minister George Papandreou worked with fellow ministers to devise a programme of cuts.

Speculation about an imminent Greek default has intensified dramatically in recent days, with credit default swaps suggesting an almost 100pc probability that the country won't be able to pay its €345bn debt.

Finance Minister Michael Noonan confirmed that Greece was discussed extensively at this weekend's meeting of European finance ministers, though he insisted the prospect of a default was not explored.

Mr Papandreou cancelled a planned visit to the US on Saturday after it became clear that Greece would only get its October installment of bailout cash if it convinces the troika that it's taking adequate steps to manage public finances.

A government official said yesterday's cabinet meeting was "to examine measures from public sector layoffs to more pension cuts". These measures, along with other austerity moves, are expected to be communicated to the troika in today's conference call.

Last week, the Greek government decided to put a new tax on real estate in the hope of collecting about €2bn annually.

"The troika thinks the recently announced property levy will not suffice to plug the budget hole and is pressing for measures on the spending side -- cuts in public sector wages and employment," said a second government official who asked not to be named.

Criticised

The conservative New Democracy opposition has criticised the government for overtaxing the economy and driving it into a tailspin. Its leader, Antonis Samaras, called for snap elections on Saturday saying the policy mix was wrong and was not yielding any results despite people's sacrifices.

Despite the turmoil in Athens and the markets' brutal assessment of the situation, Mr Noonan said he was feeling "more confident" about the Greek situation after two days of meetings with fellow finance ministers.

"After the discussions I was party to, I think the Greek situation will be resolved," he stressed.

Meanwhile, German chancellor Angela Merkel yesterday suffered her sixth defeat in seven elections this year after her CDU candidate lost out to the centre-left Social Democrats (SDP) in Berlin.

The SDP's candidate for the city's mayor won 29.5pc of the vote, according to exit polls, while the CDU won 23.5pc, the Greens won 18pc and the left took 11.5pc.

ms Merkel, under fire for her hesitant leadership in the eurozone crisis, is halfway through a four-year term. But election setbacks for her CDU have hurt her standing before the vote on eurozone measures in parliament at the end of September.

(Additional reporting, Reuters)

Irish Independent

Promoted articles

Also in Business