French PM backs more time for Greek reforms


GREECE RECEIVED an unexpected boost yesterday when the French prime minister gave explicit backing to unofficial requests to creditors for an extension to its 2013-2014 austerity programme.

Jean-Marc Ayrault’s call for Athens to be offered a breathing space to complete fiscal and structural reforms came as Greek finance ministry officials struggled to identify €1.5 billion of alternative spending cuts after the bailout troika of the EU, European Central Bank and International Monetary Fund rejected previous proposals as “too soft”, a senior government official said.

The cuts are part of a €11.5 billion package, equal to almost 6 per cent of national output, that Greece has been struggling to put together. On several trips to Athens since June, the troika’s chief inspectors have called for increasingly tough measures to achieve a balanced budget by 2014 so as to ensure Greece can remain a euro zone member.

Greek finance minister Yannis Stournaras had what Greek officials called a “short-lived confrontation” with the troika last week, refusing to make further cuts in pensions and salaries.

Prime minister Antonis Samaras has been unofficially seeking a two-year extension in talks with European leaders, hoping to promote a modest economic recovery by 2016. The country’s recession is deeper than forecast – with the economy projected to shrink by almost 7 per cent this year and another 1.5 per cent in 2013. He argues this is causing unprecedented hardship for ordinary Greeks.

Opposition to the latest round of cuts, which will knock another 20-30 per cent off pensions and public sector salaries, is already mounting, with public sector unions due to hold a 24-hour strike on Wednesday. – (Copyright The Financial Times Limited 2012)