Greece, lenders agree on cuts

Athens: Greece and its international lenders have agreed on how to achieve budget cuts worth €325 million (Dh1.56 billion) this year, one of their last demands in return for sealing a €130-billion rescue, Greek government sources said yesterday.

The cuts were the last set of austerity measures that remained to be specified, out of a €3.3 billion savings package required by the European Union and the International Monetary Fund to continue bankrolling Greece.

Greek political leaders had failed to agree on the package last week, mainly because they were striving to avoid even deeper pension cuts in a harsh austerity programme approved by parliament early on Monday.

"One hundred million euros will come from a cut in the operating expenses of the Defence Ministry and about €90 million by cutting some public sector wages earlier than scheduled," one government source told Reuters.

"The remaining €135 million will come from additional cuts in the operating expenses of ministries for the Interior, Health and Labour. The Labour Ministry savings may relate to pension cuts," the government official said. One other government source confirmed the breakdown.

Ill-tempered negotiations

Greece hopes that Euro-zone finance ministers will approve the bailout on Monday after months of often ill-tempered negotiations.

Tensions between Athens and other European capitals have hit new highs this week.

Although the European Union is officially still warning of the far-reaching dangers of a disorderly default by Greece, some politicians have in recent weeks downplayed the effects of such an event.

Athens and the Eurozone have spent much of the past two years working to avoid a default, but the measures demanded in return for the second bailout cut to the bone of Greek society and the Greek state, making it difficult it to see how the country can restore growth.

"Greece has made all the efforts that it needed to do, and the people cannot take any more," Greece's Public Order Minister Christos Papoutsis said after a Cabinet meeting. "The government is making superhuman efforts and we have reached the limits of the social and economic system. From now on, Europe has to take the responsibility."

But politicians are struggling under the weight of having to make decisions that will affect generations to come.

"It has appeared that further technical work between Greece and the troika is needed in a number of areas," Jean-Claude Juncker, the prime minister of Luxembourg who also chairs the meetings of Eurozone finance ministers, said in a statement calling off Wednesday's meeting.