Greece is seeking a two-year extension of its latest austerity programme aimed at improving the country’s debt sustainability and prospects for a return to growth, according to a document obtained by the Financial Times.
Prime Minister Antonis Samaras is expected to outline the proposal during talks next week with German Chancellor Angela Merkel in Berlin and French President François Hollande in Paris, after a meeting with Eurogroup chief Jean-Claude Juncker in Athens next week (Aug 22).
As the paper writes, the Greek government will ask France and Germany to allow Greece to spread the package of EUR 11.5 billion in 4 years, starting in 2013, that is to reduce government spending by about EUR 3 billion a year until the end of 2016.
Ioannis Mourmouras, senior economic adviser to the prime minister said that the greater than expected recession for this year, with Greece’s GDP expected to fall by 7%, is justifying the request for extension. “The deficit reduction requested for the 2013-2014 period is excessive. An over-dose of austerity measures would be suicidal,” he stressed.
Referring to PM Antonis Samaras’ visit to Berlin, German government spokesman Steffen Seibert said “the chancellor will certainly first listen to what Mr. Samaras has to say about the situation in Greece and the implementation of the [reform] programme.” He added: “the findings of the trio of creditors providing financial aid to Greece will remain the basis for further decisions… The troika report is for everyone, not just the federal government, but for all countries, to decide
According to protothema.gr, quoting a source with the PM’s office, there will be no meeting of the three coalition leaders before Antonis Samaras’ meeting with Eurogroup chief Jean-Claude Juncker in Athens, and the tour in Berlin and Paris right after. Until Juncker’s arrival in Greece, the package of measures for EUR 11.5 billion will be completed. Media reports suggest that coalition leaders Evangelos Venizelos and Fotis Kouvelis, although continuing to support the government, they need to demonstrate that they do not identify with the Prime Minister, as they are under pressure from their own parties and also would like to maintain room for communication maneuvers in view of the politically difficult September. Labour reserve in the public sector, cuts in wages and pensions and the privatization of public enterprises remain issues of disagreement in the coalition government.
As protothema.gr writes, Samaras is preparing to present Juncker the package of measures and the plan for privatizations and a smaller public sector. Maximos Mansion believes that a good meeting with Juncker will prepare the ground for the meetings with Merkel and Hollande. The PM’s discussions will affect the Troika report, as they will return in late August, and will also shape the climate for the September Eurogroup to discuss the tranche of EUR 31.5 billion. By then Samaras will have met with the director of ECB and the head of IMF.
The government’s target is clear: “The country should stand upright within the euro as well, until the implementation of critical decisions about managing the debt crisis in the Eurozone. Samaras will take all necessary steps in consultation with the partners in order to restore confidence in the country, whatever the political cost at home.” In his meetings, Samaras will describe the difficult situation within the country and request the extension of the fiscal adjustment programme.