Greek PM pledges growth as recession deepens

ATHENS—Greece’s prime minister warned yesterday that the country’s battered economy is expected to contract by seven per cent this year, but pledged to drag it back to growth within 18 months. Antonis Samaras also insisted he would seek a deal with international bailout creditors “as soon as possible” to allow more time for cutbacks and reforms that are key conditions of Greece’s rescue loans.

Representatives of Greece’s creditors started their inspection of the country’s austerity programme yesterday by holding talks with Finance Ministry officials. Today, chief inspectors from the EU, the IMF and the European Central Bank — collectively known as the troika — are due in Athens for weeks of talks ahead of their next report on Greece’s austerity programme, on which continued payment of the loans hinges. European Commission President Jose Manuel Barroso is also scheduled to visit Athens this week to hold talks with Samaras.

Debt-crippled Greece depends on rescue loans from its European partners and the International Monetary Fund to keep paying for vital public services and servicing its loans. If Athens fails to honour its pledges for further cutbacks and reforms, the cash lifeline could be severed, forcing the country to default on its obligations and potentially abandon the common European currency.

That would condemn a population reeling from two and a half years of income cuts and job losses to further misery, as a new Greek currency would plunge in value, wiping out savings overnight and sending the cost of key imports far beyond most Greeks’ reach. Samaras told his conservative party lawmakers that his month-old coalition government must demonstrate that it respects and can implement its bailout commitments.

“Next, we will show that to attain our targets some things must change, principally what aggravates and deepens the recession,” he said. “Certainly, an agreement to extend the programme is something that we will seek as soon as possible.” Samaras said the country’s economy could contract by more than seven per cent this year — from an original predicted contraction of 2.8 per cent — bringing the cumulative fall in output to 20 per cent over the past five years. He claimed, however, that the government could bring Greece back to growth “at the beginning of 2014.”

Hours after Samaras’ remarks, the government announced a list of 21 state-run agencies due to be merged or abolished, including several public training and research institutes. Some 5,200 workers at those agencies are to be transferred to other jobs.

Greece’s calls for an extension on the deadline for its austerity measures — from 2014 to 2016 — have not been welcomed by European governments. The country’s creditors are becoming more exasperated with delays and broken pledges from Athens. Some seem inclined to cut their losses and allow Greece to drop out of the 17-member eurozone.

On Sunday, German Vice Chancellor Philipp Roesler questioned whether Greece can fulfill the conditions for receiving further international aid and said the idea of the country leaving the euro had “lost its horror.” Without specifically referring to anyone, Samaras said “irresponsible” foreign officials who publicly anticipate that the Greek austerity programme will fail “are doing what they can for (Greece) to fail.”

Samaras will hold talks today with his ministers of finance and development ahead of Barroso’s visit tomorrow. The EU leader last visited Greece in June 2009, before the country’s major financial crisis broke.

AP