Troika and Greece Can’t Agree on Spending Cuts

By Andy Dabilis on September 9, 2012 in Economy, News, Politics

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 0  54 Envoys from international lenders have said they doubt whether some $2.8 billion in projected savings as part of a $14.6 billion spending cut plan devised by the government led by Greek Prime Minister Antonis Samaras can be achieved, temporarily shelving his plans to convince them to keep sending rescue monies.
Samaras, the New Democracy Conservative leader, also hasn’t been able to convince his reluctant partners, the PASOK Socialists and tiny Democratic Left, to accept pay and pension cuts, tax hikes and plans to lay off and eventually fire some 35,000 workers.
Battling on two fronts, Samaras had put Finance Minister Yiannis Stournaras as his point man to negotiate with officials from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) to put their imprimatur on plans to cut spending for the 2013-14 period as they demanded.
The newspaper Kathimerini reported that Troika officials rejected the government’s estimate of 750 million euros ($958.6 million) in savings by cutting administrative costs in the public sector, 911 million euros ($1.16 billion) in health care and social security expenditures, and especially $660.9 million in defense spending. The Troika representatives were said to be skeptical the defense cuts would be permanent.
It’s critical for Samaras to get his partners and the Troika to reach consensus with his government or the country could face losing a $38.8 billion installment, the last in a first series of $152 billion in rescue loans, as well as a pending second bailout of $173 billion.
The new austerity measures are another round in deep pay cuts, tax hikes and slashed pensions primarily aimed at workers, pensioners and the poor, but have already resulted in a number of strikes, with teachers set to walk off the job on Sept. 12, joining judges, who began a five-day strike this week.
The Troika has said unless Samaras can get his partners, the PASOK Socialists and tiny Democratic Left to ram the new measures through the Parliament that the money pipeline could be cut off, leaving Greece bankrupt and unable to pay its workers or pensioners.
The country has already stopped paying its bills and most tax revenues are going to pay back the loans that have essentially left the country dependent on welfare aid as austerity has worsened a five-year recession, putting nearly two million people out of work, and shrinking the economy by 7 percent.
“The Troika has not accepted all the measures, but we have alternative proposals,” PASOK’s new leader Evangelos Venizelos said. Greek Finance Minister Yannis Stournaras played down the inspectors’ objections, saying they had rejected only a “few” measures.