Stournaras and troika meet to decide on last 2.5bln of cuts

Finance Minister Yannis Stournaras is due to resume talks with the troika on Friday afternoon with the aim of agreeing the final cuts needed to seal the package of some 11.5 billion euros demanded by the troika.

Hopes that an agreement would be reached were raised after Stournaras met with representatives of the International Monetary Fund, European Central Bank and European Commission early into Friday morning.

Greece still has some 2.5 billion euros of savings to find. Some 6.5 billion euros is going to come from cuts to wages, pensions and benefits. Another 1.1 billion will be saved by the rise in the retirement age from 65 to 67. Administrative reforms are to account for 1.5 billion euros.

The coalition is hoping to agreed that the remaining 2.5 billion euros in savings can come from measure such as the reduction of civil servant numbers through early retirement rather than sackings. Coalition leaders want to avoid at all costs mass sackings and added cuts to wages and pensions.

However, apart from the 2.5 billion euros in cuts, Stournaras also needs to present plans for raising an extra 2 billion euros in tax revenues. The tax hikes had been agreed as part of Greece’s second bailout earlier this year.

A number of suggestions have been put forward for how revenues could be raised. One idea that has gained ground is a tax on property owners who rent their homes or business premises. The tax would start at 150 euros per head per year and rise according to the income from the rentals.

Troika officials are expected to leave Athens next week and return before the Eurogroup meeting on October 8.

If an agreement is reached this week, coalition leaders will have to give their approval when they meet next week after their talks on Thursday proved inconclusive.

Prime Minister Antonis Samaras travelled to Rome on Friday to meet Italian Premier Mario Monti and the Pope.


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