ECB issues warning to Greece


The European Central Bank told Greece today not to waste time trying to renegotiate its international bailout as government ministers hashed out a plan for easing its punishing terms before a review by the country's lenders.

Echoing Greece's euro zone partners, ECB policymaker Joerg Asmussen signalled that prime minister Antonis Samaras was unlikely to win much leeway in imposing austerity measures demanded by the European Union and IMF under its bailout programme.

"The first priority for the new Greek government has to be getting the programme back on track," Mr Asmussen, an ECB executive board member, said in a speech in Athens. "The new government should not lose precious time looking to avoid or loosen the programme."

Facing huge public pressure, Mr Samaras wants more time to meet targets and to dilute the austerity measures that have helped condemn Greece to a fifth year of recession.

Ministers from the conservative-led coalition were huddled in talks today to work out the plan before "troika" inspectors from the EU, ECB and IMF begin their review of Greece's faltering progress in fiscal adjustment and reforms.

Greek and troika sources said the inspectors would start their work on Wednesday, with mission chiefs also visiting to meet the new government. The process could take weeks.

"We haven't seen any numbers for some time now. We need at least a week to catch up," a troika official told Reuters.

Mr Samaras's election victory on June 17th over a radical leftist bloc committed to tearing up the bailout deal removed the immediate threat of Greece crashing out of the euro.

But his uneasy coalition of right and left was forged on a promise to ease the burden on a society struggling with the tax hikes, job losses and wage cuts imposed as the price of two multi-billion-euro bailouts since 2010.

Mr Samaras (61) says the harsh austerity is only choking the Greek economy and delaying recovery.

The euro zone says the programme can be adjusted to take account of weeks of political paralysis during elections in May and June and the deeper than expected recession.

However, lenders led by Germany, the biggest contributor to the bailout, have ruled out any radical changes.

Opposition leader Alexis Tsipras, whose left-wing Syriza bloc surged into second place in the June election on a promise to reject the bailout, said Greece was "just chasing its tail".

"Continuing the bailout's austerity will push our country to voluntarily withdraw from the euro zone," he told the Economist Conference where Mr Asmussen spoke.

Mr Asmussen, a former adviser to German chancellor Angela Merkel, later met Greece's outgoing and incoming finance ministers, saying afterwards only that they had a "good first meeting".

Cabinet ministers gathered at the finance ministry to prepare for the troika visit and were expected to meet Mr Samaras, who is recovering from eye surgery, later in the day.

There was some relief when the government received the remaining €1 billion portion of its latest bailout tranche worth €5.2 billion, a senior government official said.