Prime Minister Lucas Papademos informed his ministers on Thursday of the major structural reforms and further austerity measures that Greece will have to adopt if it wants to qualify for further loans from the European Union and International Monetary Fund. Papademos distributed among his ministers a 10-page document that contained the demands being made by Greece’s lenders, also known as the troika. These include the fulfillment of prior requests, referred to as “prior actions,” as well as new measures that the interim government will have to pass through Parliament. Among the demands being made by the troika are a further streamlining of the public sector, which will include 150,000 sackings by 2015, no exceptions to the across-the-board pay structure for civil servants, cuts in defense and health spending, and the closure of state bodies. The austerity measures include cuts to auxiliary pensions and the merging of these pension funds into one, an increase of 25 percent in the objective, or taxable, property values and 2.2 billion euros in spending cuts this year.
Other actions that are being demanded by the troika are two or three major privatizations in the second quarter of this year, the cancellation of any discounts or favorable payment terms for money owed to the state, and the reduction of social security contributions by 5 percent. There is no clear mention of a reduction in private sector wages although the troika does request that salaries become more flexible. Papademos is due to put the measures to the leaders of the three parties in his coalition government when he meets them on Saturday before finalizing the plan with his Cabinet on Sunday.
The Greek prime minister is then due to present the outline to his European Union counterparts at a summit in Brussels on Monday. The premier is expected to ask the party leaders to ensure that their MPs support the measures but a number of ministers expressed concern about the reaction of some lawmakers. New Democracy’s representatives in the government highlighted the issue of changes to auxiliary pensions, which the conservatives oppose.
There was also concern about possible cuts to private sector wages and it was decided that Papademos should take up the issue with the IMF and the European Central Bank. He is due to meet troika representatives on Friday.