The Greek economy, he said, has a deficit in competitiveness and on occasion a deficit in productivity, and stressed that "the top priority is to advance- and they will be advanced- the major structural changes by the end of the year, namely the privatisations, drastic changes in public administration (extension of the new civil service salary scale to the public utilities and enterprises, the so-called 'DEKO'), expansion of reserve labor, changes to the labor market and in the health sector and primary healthcare, changes to the collective labor agreements regime, and a new taxation system. He said that the recession in the economy this year will be deeper than predicted, approaching 5 percent, while the economy will not return to positive growth rates in 2012 and this changes the facts on the deficit, but added that the target could be feasibly attained with the measures that have already been legislated.
High-ranking ministry sources told ANA-MPA that no rift has arisen with the troika chiefs, and that the three meetings between government vice president and finance minister Venizelos and the troika chiefs held in space of just 24 hours were "cooperative and friendly", adding that "the first round of talks ended Thursday night and a second round will start in about 10 days".
Negotiations between the Greek government and the 'troika' were discontinued late Thursday night, after the troika called for additional measures of 1.7 billion euros due to a 1.1 billion euros shortfall in state revenues and a 600 million euros increase in expenditures for social security funds, with the finance ministry reacting strongly to the demand, warning that more measures would further negatively impact the deep recession in the Greek economy.
Venizelos said that the 8 billion euros 6th tranche of the EU-IMF bailout loan to Greece comprises the 'springboard' of the discussions with the troika.
He said the partners were fully aware of the country's cash reserves and borrowing needs, and there is no doubt that "everything is covered".
The matter of the 8th tranche will be completed at the proper time, in the best and most inexpensive way, the minister said, while he also intimated that the 6th tranche of the original bailout loan could possibly be the 1st tranche of the second loan package to Greece, which has a much lower interest rate.
On the new loan package and the Greek bond swaps (PSI) programme, Venizelos will hold new discussions with his counterparts at the informal eurogroup and ecofin ministers' meetings on September 16 and 17 in Poland, with the minister appearing positive that the discussions on the PSI will be completed in early October and underlining that "it is a very big opportunity for the reserves of the Greek social security funds" that hold government bonds.
Venizelos also said he was categorically against early general elections, warning that "nothing is more harmful and undermining for the country than causing political instability and uncertainty at this time".
He harshly criticised the main opposition New Democracy (ND) party and its call for a longer fiscal adjustment period, but added, however, that he was "open" to "good ideas and proposals" because "support, rallying together, patience and hope are needed now".
Venizelos briefed prime minister George Papandreou by phone on all the discussions with the troika, following the latter's return on Friday from an international conference on Libya held in Paris the previous day, while he had also conferred with the premier late Thursday.
EU-IMF troika to return to Athens mid-September
The team of representatives of the European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) will return to Athens in mid-September, a troika statement on the Fifth Review Mission to Greece said on Friday.
The statement said that the mission has made "good progress", and will return to Athens by mid-September, allowing the Greek authorities to complete technical and other work related to drafting the 2012 budget and growth-enhancing structural reforms.
"A joint EC/ECB/IMF team has been discussing recent economic developments and reviewing policy implementation in the context of the fifth review of Greece's economic program. The mission has made good progress, but has temporarily left Athens to allow the authorities to complete technical work, among other things, related to the 2012 budget and growth-enhancing structural reforms. The mission expects to return to Athens by mid-September, when we expect the Greek authorities to have completed the technical work, to continue discussions on policies needed to complete the review," the troika statement said.