According to media reports, in a meeting yesterday between Prime Minister Antonis Samaras and the government economic team headed by the FinMin, the austerity package was finalised. It included further cuts in salaries and pensions, increase of retirement age and abolition of the tax-free threshold for self-employed professionals. Final decisions will be made in a meeting between coalition party leaders tomorrow.

Sources told Kathimerini, yesterday’s meeting was to agree on the outlines of a package that will be acceptable to the two coalition partners, for an agreement to be reached before a Eurogroup working group on Friday. When they meet, the leaders are also expected to discuss when, and in what form, the package of measures is to be submitted to Parliament.

In comments made to Reuters, FinMin Stournaras referred to the cost of an extension of the fiscal adjustment programme for Greece. “We estimate the funding gap that would be created if we get the two-year extension at EUR 13 to 15 billion,” Stournaras said, adding that the size of Greece’s fiscal deficit was EUR 13.5 billion, hence the need for EUR 11.5 billion in spending cutbacks and EUR 2 billion in new revenues.

Stournaras’s comments came as Christine Lagarde, the head of the International Monetary Fund warned that Greece faces a financing gap that won’t be solved by budget measures being discussed because a weak economy and delayed privatizations have worsened its fiscal situation.

Ahead of today’s 24-hour general strike, government sources expressed concern about industrial action in recent days, particularly by public sector employees, which has slowed down the collection of tax revenue, Kathimerini reports.

If this deadline is missed, then the chances are raising the troika report to be postponed after the U.S. elections with Greece loosing big. The rest, Brussels, Berlin and troika, seem to have no reason to hurry, real.gr writes.

After the completion of the last round of negotiations last Friday and the ‘short pause’ announced by the troika, Poul Thomsen from the IMF, Mathias Morse from the EU, and Klaus Mazouch from the ECB are expected Friday in Brussels at the meeting of Euroworking Group.

Troika head representatives are expected to return to Athens next Monday, October 1, which is the deadline –according to the constitution- for the government to table the draft 2013 budget; by then, the crucial meeting of the Eurogroup will be just seven days away.

The Greek side wants a full list of measures to be presented in the Eurogroup of October 8 and then the troika report to give the green light at the EU Summit on October 18 for the release of the next tranche of the bailout plan. Until next Monday, the government has to agree with the troika’s technical teams measures of EUR 11.5 billion.

Meanwhile, IMF Managing Director Christine Lagard warned that Greece faces a financing gap that won’t be solved by budget measures being discussed because a weak economy and delayed privatizations have worsened its economic situation.

Lagarde said efforts being discussed by the Greek government and the troika to find 11.5 billion euros in savings won’t be enough to put back on track Greece’s 130 billion-euro  bailout jointly funded by the IMF, the European Commission and European Central Bank, according to Bloomberg.

The IMF has indicated that any additional financing for Greece will have to come from Europe. In a March report on Greece, IMF economists said the country may need more aid from Europe or further debt restructuring if the current loan program went off track.

“I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education,” she said in an interview with UK-based Guardian newspaper.

“I have them in my mind all the time. Because I think they need even more help than the people in Athens,” she added.

In her interview she said Greeks “have to pay their tax,” adding that she thought “equally” about those deprived of public services by the crisis and those involved in tax avoidance.

“As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time,” Lagarde said.

Tax evasion is considered a major issue in Greece, with the government earlier this year publishing a list of more than 4,000 wealthy individuals it said owed the state more than $14bn, according to Al Jazeera. Greece, in its fifth year in recession, has been struggling to apply tough austerity measures in exchange for EU-IMF bailout packages. The country has witnessed widespread cuts of up to 40 percent of pensions and minimum wages.

Asked by the newspaper of whether it was “payback time” for Greece , she responded, “That’s right”.

Greece is on the verge of getting kicked out of the eurozone as the Radical Left Coalition, Syriza, which is leading in opinion polls for June 17 elections, has promised to reject the terms of the bailout.

New sanctions by the U.S. and EU against Iran have stirred up tensions and a risk of hostilities, including a military attack by Israel on Iranian nuclear facilities.
The report pointed to the recent forewarnings by US President Barack Obama and IMF chief Christine Lagarde that tensions over Iran could increase oil prices and lead to an “economic shock”.According to the report, after the EU’s January decision to ban the imports of the Iranian crude, figures in March showed that the eurozone has slid into greater recession with the private sector activity, signifying an unforseen sharp drop according to Markit research firm’s purchasing managers’ index (PMI).

Chinese manufacturing activity  also fell, according HSBC bank’s preliminary Purchasing Managers’ Index (PMI), adding to concerns about recession in the world’s second largest economy.

The IEA estimates that exports from Iran could plunge by about 800,000 barrels per day to one million bpd in the second half of the year after the tighter Western sanctions go into force.

Since the end of 2011, global crude prices have risen by 20 percent, and if Iran, as the world’s third oil exporter, cuts its exports following the imposition of sanctions, or if Tehran threats become real of closing the Strait of Hormuz, one of the world’s key maritime routes, the crude prices will reach the  peak aggravating the situation for the West’s struggling economies.