With a deal on a crucial debt swap said to be close to completion, talks got under way on Friday between government ministers and representatives of Greece’s foreign creditors on the reforms and additional austerity measures the country must take if it wants to qualify for more rescue aid. Speaking to Skai, government spokesman Pantelis Kapsis sought to play down the scope of the demands. He said that there would be no 25 percent increase in objective, or taxable property values – one of the several measures included in a list of demands given by foreign auditors on Thursday to Prime Minister Lucas Papademos -- and no additional tax increases. Kapsis noted however that foreign auditors were pressing for an overhaul of the state sector including thousands of layoffs. Kapsis did not rule out the possibility of Papademos taking up the issue of possible cuts to private sector wages himself with visiting envoys from the European Commission, European Central Bank and International Monetary Fund, known as the troika. The premier was scheduled to meet with the troika on Friday as media speculation mounts about the possible abolition of the so-called 13th and 14th salaries. Meanwhile, Skai understands that officials in Washington believe that Papademos’ three-party coalition should remain in place until at least September to push through the reforms it is being asked to commit to.
Papademos is expected to meet with all three party leaders, once again, on Saturday, to rally their support amid pressure from the troika for the three politicians to offer guarantees demonstrating their commitment to the economic reforms. Earlier on Friday Labor and Social Insurance Minister Giorgos Koutroumanis was meeting with the troika. He was expected to defend the 13th and 14 salaries, following discussions with labor unions and business associations which vehemently oppose such as measure. According to sources, Koutroumanis is expected to counterpropose the introduction of flexibility into the labor market by allowing enterprises in specific sectors to draw up work contracts. On the other thorny issue of auxiliary pensions, the troika’s demand is that another 650 million euros in cuts be carried out over the next three years.