EU, IMF insist no Greek creditor deal yet

2012-10-25 07:58

Athens - Greece's finance minister announced he had agreed a new austerity deal with international creditors, but the EU and IMF insisted that while there had been progress, no deal had yet been thrashed out.

Yannis Stournaras told parliament Wednesday the so-called troika had granted a long-sought extension in return for a €13.5bn austerity package needed to unlock funds vital to keep the country afloat.

But officials at both the European Union and the International Monetary Fund were quick to make it clear that the troika had not yet reached any agreement with Athens.

"Substantial progress has been made in talks with Greece but a few outstanding issues remain before a staff-level agreement can be reached," a spokesperson for European economic affairs commissioner Olli Rehn said in a tweet.

The International Monetary Fund issued a similar message soon after.

"There has been progress in recent days, but some outstanding issues remain to be agreed upon to reach full staff-level agreement," a spokesperson said.

"Furthermore, financing issues will be discussed between the official lenders and Greece."

European Central Bank chief Mario Draghi also said that while there had been progress "the review is not finished yet".

The EU has been negotiating alongside the ECB and the IMF on a new round of spending cuts and reforms by Greece to unlock a €31.2bn installment from its rescue loans.

A finance ministry source had said earlier that the government hoped to present the deal to a Eurogroup meeting on Thursday, ending talks that have dragged on since July.

But Finance Minister Wolfgang Schaeuble of key paymaster Germany said: "As far as the German government knows there are no new findings.

"When the proposals (from the troika) are on the table, the Eurogroup will look at them. There is nothing more to add."

Earlier Stournaras had said that he had finalised the agreement on cutbacks in talks with the troika's auditors.

"We have obtained the extension," he told parliament, announcing that two draft laws related to the package would be presented to parliament next week.

The new measures, to be voted on by November 12, still have to be approved by Greece's three-party coalition government, with key allies remaining split over the painful reforms.

According to the draft budget, Greece plans to cut the public deficit to 6.6 percent of output this year - still over twice the EU limit.

'Greece will be saved by those who dare'

European leaders have long maintained that extra time for Greece means more money from eurozone taxpayers.

But Stournaras said: "Greece aims to cut its debt through lower interest rates and an extension in the repayment of loans it has received from the EU and the IMF."

German daily Sueddeutsche Zeitung and Greek media had reported that Athens would be given two more years to slash its public debt mountain and implement key labour reforms and privatisations.

Greece, heading for a sixth straight year of recession, is desperately trying to unlock the new installment of loans from the troika.

In exchange, Athens has to agree to tough economic reforms, but the measures are deeply unpopular among ordinary Greeks who have taken to the streets in sometimes violent protests.

With unemployment topping 25%, the government has been pleading for more time to implement the austerity measures.

Media reports had said Athens would be given to 2016 to cut its deficit to the EU limit of 3% of gross domestic product rather than the previous deadline of 2014. Its total debt stood at a whopping 150% of GDP at the end of the second quarter, according to Eurostat.

The reported agreement also scaled back targeted privatisation revenue to €10bn by 2016 - effectively nine billion less over an extra year - while calling for a two-year rise in the statutory retirement age and fresh cuts to state salaries and pensions.

Earlier Wednesday, ECB executive board member Joerg Asmussen said that if Athens did get another two years to implement its reforms, other members of the 17-nation eurozone would have to lend it more money to bridge the deficit shortfall.

Athens recently pledged €7.8bn in cuts next year, only to be told by the troika that an effort of €9.2bn was required to counterbalance the effects of the recession.

Prime Minister Antonis Samaras's political allies, the socialist and moderate leftist parties, have baulked at calls to lower severance pay and facilitate layoffs while the country faces record unemployment.

"Greece will be saved by those who dare," Samaras said on Tuesday after a meeting of coalition leaders. "We have already modified many of the troika's original proposals - on labour issues and others - and the negotiation continues."