Greece outlines plan to ease bailout terms

Greece’s new government has said it wanted to review several austerity measures that the debt-ridden country agreed as part of bailout packages.

The government on Saturday said it wanted to bargain for a two-year fiscal adjustment extension as it prepared for an EU-IMF audit next week.

A policy document released by the conservative-led coalition said efforts to “revise” Greece’s bailout deal in talks with creditors starting on Monday include “the extension of the fiscal adjustment by at least two years,” to 2016.

The aim would be to meet fiscal goals “without further cuts to salaries, pensions and public investment” and new taxes, it said, announcing a freeze on further civil-service layoffs, sales-tax cuts and longer unemployment benefits.

“The aim is to avoid layoffs of permanent staff, but to economise a serious amount through non-salary operational costs and less bureaucracy,” the three-party coalition document said.

The programme, agreed by leaders of the three-party coalition after a June 17 election, faces its first test at a two-day EU summit starting next Thursday.

Conservative Prime Minister Antonis Samaras, a Harvard-educated economist who switched from opposing the first bailout to reluctantly supporting the second, has promised to soften the terms without jeopardising Greece’s place in the eurozone.

No radical rewrite

Greece has been dependent since May 2010 on funds from two international rescue loan deals with other EU countries and the IMF, in return for which it imposed a series of deep spending cuts and tax hikes. Its most recent austerity programme runs to mid-2014.

If implemented in full, the new programme would undo many austerity measures the country agreed in February to clinch a 130 billion euro ($163bn) bailout package, its second since 2010.

Whether the coalition government, which consists of the conservative New Democracy, Socialist PASOK and Democratic Left, can deliver on its renegotiating pledges will depend on how they are viewed by their international creditors.

Debt inspectors from the European Commission, European Central Bank and IMF are due to return to Athens on Monday to review the country’s fiscal situation and resume talks that had been put on hold during the country’s nearly two-month political deadlock.

Eurozone partners have offered adjustments but no radical rewrite of the bailout conditions, with paymaster Germany particularly resistant to Greek calls for leniency.

The eurozone has been battling the worst debt crisis in decades and the contagion seemed to have spread to Italy and Spain, the eurozone’s third and fourth-largest economies, respectively.