Greece’s government will implement reforms to convince the European Union and the International Monetary Fund of the need for more time to reduce the budget deficit as officials confirmed the country will fall short of promised funds from the sale of state assets this year.
Prime Minister Antonis Samaras and coalition partners Evangelos Venizelos, the head of the Pasok party, and Democratic Left leader Fotis Kouvelis agreed yesterday to press ahead with reforms after an official at the state-asset sale fund said Greece won’t be able to raise 3.2 billion euros ($3.9 billion).
“We must pursue reforms, we must convince them that the recession is worse than expected, we must sell state assets, to prove our credibility,” Venizelos told reporters in Athens after the meeting. “Talks are never easy. It is important to present the right arguments.”
Samaras’s government faces the risk of running out of money and defaulting while seeking to qualify for 4.2 billion euros in aid. That payment, which was due in late June as the first tranche of a 31 billion-euro transfer, was stalled because parliamentary elections delayed a review of Greece’s progress on fiscal-austerity conditions.
Greece must find ways in the coming weeks to implement a 3.2 billion-euro package agreed in March.
Finance Minister Yannis Stournaras, who July 10 had his first meeting with euro-area counterparts, consulted in Athens today with ministers on 11.5 billion euros in measures required for 2013 and 2014, two government officials said, who asked not to be identified because they are involved in the talks. The measures need to be presented to representatives of the so-called troika of creditors on July 23, they said.
The government has already submitted alternative budget cuts to the troika to replace a planned 205 million-euro reduction in wages for military, police, fire and rescue personnel, the officials said. Those cuts would come in part from reduced military spending, one of the officials said.
Kouvelis said after yesterday’s meeting that the government is working on finding alternatives to measures to alleviate the downturn. “We are in accord,” he said. The three party leaders will meet again on July 18, Venizelos said.
The June 17 vote, which sparked concern Greece would leave the euro area, also brought preparations for sales of state companies and licenses to a halt.
The target this year won’t be met because the Hellenic Republic Asset Development Fund, or HRADF, will only be able to complete two sales in the time provided, said the official in Athens, who asked not to be identified.
Those two projects are a contract for a state lottery and the lease of the IBC conference center, the official said. The pace of asset sales will be stepped up next year, with the fund set to complete 23 projects, he said.
Samaras has pledged to accelerate state-asset sales, a centerpiece of debt-reduction efforts, to win backing for more time to reduce the country’s deficit and implement reforms.
Support for his coalition government also relies on convincing the EU and IMF to loosen some of the tougher austerity measures that have driven the country into a fifth year of recession. Unemployment rose to a record in April of 22.5 percent, the Hellenic Statistical Authority said today.
The sales, which are expected to raise as much as 50 billion euros up to 2022, have been held up by political disputes and opposition from unions and complicated by bureaucratic problems such as a lack of deeds for real estate.
HRADF Chief Executive Costas Mitropoulos said on May 17 that the program would suffer months of delays amid the second election to choose a new government. His comment came a day after the fund’s board decided to freeze all projects until the June 17 vote.
Greece’s international lenders have already criticized the slow pace of asset sales, which are designed to pay down debt. The European Commission said in March that the 50 billion-euro figure “remains viable, though over a much longer horizon than envisioned initially.” The target for end-2015 is to raise 19 billion euros.