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Europe
Greece and troika discuss austerity measures
Talks still hampered by differences among creditors over long-term sustainability of Greece's debt, say analysts.
Last Modified: 06 Oct 2012 22:02
Greece may not receive the next round of agreed aid package that would save it from bankruptcy [Reuters]

Officials from Athens, the European Commission, European Central Bank and the International Monetary Fund have met in the Greek capital to discuss cuts to the Greek government.

Yannis Stournaras, finance minister, met with troika inspectors on Saturday to discuss cuts of $15bn in order to unlock $41bn in urgently needed bailout funds.

"The government and the troika are working around the clock so that the progress is noted at Monday's Eurogroup
and the Greek issue gets on the EU summit's agenda," an official told the Reuters news agency.

Talks have been hampered by serious differences among the creditors over the long-term sustainability of Greece's
debt.

The IMF has argued that bondholders will have to take further write-downs, sources on both sides said.

European governments and the ECB are now the biggest creditors.

Merkel visit

Angela Merkel, the German chancellor, is planning to come to Athens the day after the euro zone meeting to meet with Antonis Samaras, Greek prime minister, who told a German paper this week that Greece would run out of money by the end of November.

Samaras went on to suggest the ECB could help by easing the terms of its Greek debt holdings but Joerg Asmussen, ECB executive board member, told the newspaper Bild am Sonntag the bank cannot extend the maturity of Greece's bonds or reduce their interest rates.

"Both things would be a kind of debt relief and would therefore constitute direct financing of the Greek state. The ECB is not legally allowed to do that," he was quoted as saying in an interview for the newspaper's Sunday edition.

Asmussen told the newspaper it was "not a done deal" that Greece would get the next tranche of its agreed aid package in November and thereby be saved from bankruptcy.

The necessary precondition for the disbursement of the next tranche is that the "hole in [Greece's] 2013/14 budget is closed and that extensive structural reforms are carried out," Asmussen is quoted as saying.

Merkel's visit to Greece will be the first since the euro zone debt crisis erupted and is seen as a show of support for Athens.

Samaras hailed the trip as a positive development.

Greece's crisis poses potentially the most serious risk to Merkel's re-election prospects next year, unless a way can be found to keep Athens afloat and avoid another debt restructuring before the German parliamentary election next September.

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Source:
Agencies
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