Greece sees more recession among talks resume

Greece yesterday unveiled a draft budget that forecast a sixth year of recession as the government resumed crucial talks with international creditors to access loans that have been stalled for months. The Finance Ministry said the country was headed for a 3.8-percent economic contraction as Prime Minister Antonis Samaras prepared to meet officials from the so-called troika of international creditors at 1500 GMT. The meetings — and a new austerity package worth 13.5 billion euros ($17.5 billion) — are supposed to unlock 31.5 billion euros ($40.5 billion) in frozen loans under the country's bailout. The Greek economy "awaits this money like parched earth awaits the rain," Samaras told the Greek daily To Vima on Sunday. A 90-minute meeting earlier yesterday between Finance Minister Yannis Stournaras and senior troika representatives from the European Union, the International Monetary Fund and the European Central Bank ended without statements. Upon arrival at the ministry, the auditors were heckled by a few dozen flag-waving members of the nationalist Independent Greeks party, which wants the government to repudiate the national debt and throw out the creditors' representatives. Samaras' coalition has sought to jump start a moribund privatization drive and to encourage a consolidation of the country's struggling bank sector. France's Credit Agricole yesterday said it was in exclusive talks to offload its Greek subsidiary Emporiki to Greece's Alpha Bank, under terms that would see the French bank first pump more funds into the ailing lender. The troika left Greece last week to give Samaras's coalition government time to finalize the austerity package, which is worth 13.5 billion euros. The budget draft announced yesterday includes measures "under negotiation" worth 7.8 billion euros that take effect in 2013, including a 3.8-billion euro cut to pensions and salary reductions worth 1.1 billion euros. The proposed measures also include a two-year hike to the retirement age from 65 years to 67 — for a net benefit of just five million euros. The EU-IMF loans, part of Greece's second bailout worth 130 billion euros overall, have been suspended since May when reforms ground to a halt as the country needed two elections to form a government. Samaras has been trying to overcome resistance from his socialist and moderate leftist allies in government, who have balked at imposing sweeping new cuts on a nation already slogging through a third year of austerity. They want the conservative prime minister to extract as many concessions as possible from the troika, in particular a rapid release of the loan funds and a two-year extension of the deadline on austerity measures to 2016 to ease the annual burden of the fiscal overhaul. Euro zone finance ministers are to meet on Oct. 8, and an EU summit on Oct. 18 and 19 is expected to decide on the Greek request for the two-year extension, which EU and IMF officials say could require extra funding. Doctors, lawyers, journalists, teachers and even state security staff have staged strikes and walkouts in past weeks against the new measures. After two years of austerity, nearly one in four Greeks is unemployed according to official figures, which unions say only give a partial picture. The draft budget forecasts a jobless rate of 24.7 percent in 2013. "They began in 2009 by saying we will be out of the tunnel by 2012 or 2013, but from what I see that tunnel gets longer all the time," said Costas Kouvelis, a private sector employee. Greece has so far carried out a fiscal adjustment worth a combined 49 billion euros over the last two years, the finance ministry said. "I don't see any hope in the future. The situation will be bleak until the people revolt, there is no other hope," Kouvelis told AFP. On Wednesday, police clashed with masked youths in Athens during a general strike and demonstrations that drew 34,000 people to the city center. Another 18,000 people protested in the northern city of Thessaloniki according to police. Greece's main union GSEE called a meeting tomorrow to decide on further strike action and requested an emergency meeting with the prime minister.