EU, IMF: Greece Must Push Through More Cuts to Receive Aid

The European Union and International Monetary Fund are asking Greece to push through more budget cuts and implement a series of long-agreed austerity measures before they will release a 130-billion euro bailout package the struggling country needs if it is to avoid a disorderly default.

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Greece must convince its lenders it has made progress toward resolving its debt problems before they will release the country’s second multi-billion euro bailout in three years. The EU, IMF, and European Central Bank — known as the troika — drew up a report this week listing the measures they need to see enacted by Athens before releasing the funds.

At the top of their list is passing a supplementary budget with more cuts to reach fiscal targets in 2012. The troika suggests that Greece issue large cuts in defense and and health spending as well as redundant state entities, though the document does not specify the amount of cuts needed.

The troika are also pressing Greece to adopt reform of supplementary pensions, ensure that a plan to replace only 1 out of every 5 civil servants leaving the workforce is enacted, and finalize the opening of its many closed professions (lawyers, pharmacists, etc.). They want the government to enact legislation to improve wage flexibility and further liberalize product and service markets, and are pushing the Bank of Greece to wrap up its assessment of Greek banks’ capital shortfalls.

The troika’s list of measures has not been finalized, and could change after discussions with Greek authorities, which are expected to go well into next week. Government spokesman Pantelis Kapsis said they would try to negotiate some of the points on the list.

Greece made progress on Thursday in talks with private creditors on restructuring its debt, both sides said, and will continue negotiations on Friday in the hope of sealing an agreement within a few days.

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com