Coalition partner : Greece unable to meet targets

A pledge by Greece to save 11.5 billion euros in the next two years in return for EU-IMF loans is "nearly impossible" to keep, one of the three coalition government parties said on Tuesday. "It is very difficult, it is nearly impossible to gather 11.5 billion euros ($14 billion) through spending cuts in 2013 and 2014," Evangelos Venizelos, leader of the socialist Pasok party, told Vima FM radio. "This difficulty was always there but now it is exacerbated by recession forecasts," said Venizelos, who served as finance minister in the previous government. Auditors from the EU, IMF and the European Central Bank -- the so-called 'troika' of Greek creditors -- are expected in Athens next week for another in-depth inspection of the new government's economic programme. Finance Minister Yannis Stournaras will see the audit chiefs on July 26, a finance ministry source said on Tuesday. The government says the economy could contract by 6.7 percent in 2012 compared to an earlier forecast of 4.5 percent, a slippage partly blamed by officials on across-the-board pay cuts and layoffs required under the terms of its EU-IMF bailout. Venizelos has called for a three-year extension to Greece's fiscal adjustment, extending the recovery period for the ailing eurozone state to 2017. Prime Minister Antonis Samaras also insists that Greece's weakened economy will need additional time to return to health but prior calls from his conservative New Democracy party for a two-year extension have subsided due to European opposition. Samaras will meet Venizelos and the third coalition partner, moderate leftist leader Fotis Kouvelis on Wednesday, the Prime Minister's office said. They are to examine proposals by ministers on additional spending cuts after a series of meetings chaired by Stournaras this week. Greece's European Union and International Monetary Fund creditors note that the country has achieved very little by way of promised reforms in the last two months, when back-to-back elections were needed to produce a workable government. A finance ministry source on Tuesday did not rule out new cuts to salaries and pensions if the government fails to identify other areas to trim state spending. "We are trying to avoid it but cannot rule it out," the official told the state-run Athens News Agency. "There are voices in the Eurogroup (of eurozone finance ministers) calling for additional measures, which we are trying to avoid by pointing to the greater-than-expected recession," the official said. The 'troika's' report will determine whether Greece will receive fresh loans of 31.5 billion euros by September due under its debt rescue programme. Athens also needs to payout ECB-held bonds worth 3.1 billion euros that mature on August 20, a hurdle which the Eurogroup has already pledged assistance.