Greece pushed to ramp up privatisations
Greece is holding talks with the IMF and EU after being warned to tighten austerity measures and ramp up state asset sales to secure rescue funds.
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SBS News
Greece will continue talks with the IMF and EU on Tuesday after being warned to tighten austerity measures and ramp up state asset sales to secure rescue funds and stave off bankruptcy early next month.

Greek Finance Minister Evangelos Venizelos held a conference call late on Monday with the heads of mission from the EU, IMF and European Central Bank to hammer out a response to serious slippage from agreed budget targets.

"(In) the conference call held this evening between the Deputy Prime Minister and Minister of Finance, Mr Evangelos Venizelos, and high representatives of the Troika (European Central Bank, European Commission and International Monetary Fund) a productive and substantive discussion took place," the finance ministry said in an emailed statement.

"Tomorrow morning, the teams of technical experts already in Athens will further elaborate on some data and the conference call will be repeated tomorrow at the same time," the ministry said.

UNDER PRESSURE

Greece is under pressure from its international creditors to plug a budget hole of more than two billion euros ($A2.67 billion).

The government last week announced a new hefty property tax and is expected to make further cuts in the country's massive state payroll after the finance minister admitted there was "surplus" staff in the civil service.

The talks were held as the International Monetary Fund criticised Greece for wasting time and falling behind target with a long-delayed asset sale, while the European Commission urged Athens to implement the necessary budget cuts and reforms.

"It is essential not to be constrained by taboos regarding closure of inefficient enterprises and involuntary redundancies," the IMF's representative to Greece, Bob Traa, told a business symposium near Athens.

The IMF and EW warnings were a strong signal that the auditors are not ready to approve the next slice of funding under a first 110 billion euro rescue of Greece created last year.

Greece has signalled that without the eight billion euros in loans it only has enough money to keep going until sometime next month.

DEFAULT FEARS

The IMF's Traa forecast that the recession-hit Greek economy will recover from wave after wave of crisis cutbacks and tax rises to begin growing in 2013.

But he warned that Greece would default without a sweeping sale of state assets that is a condition of a new 159 billion euro EU bailout set up last month.

"The privatisation is behind schedule because politicians can't agree how to do it. If you wait ... the country will go to a default," he argued.

"It is no secret that the (rescue) program is at a difficult moment," Traa said, adding that the Greek economy was likely to contract by 5.5 per cent of output in 2011 and 2.5 per cent in 2012.

The IMF and the EU had expected Greece to gain access to borrowing markets months ago and to return to growth early in 2012.

Greece last year slashed its budget deficit by nearly five per cent of output, a huge adjustment that was still not enough to meet targets.

European stock markets again fell sharply in response to inconclusive weekend EU talks in Poland on the eurozone crisis and signs of economic slowdown in Europe and the United States.

There is widespread speculation on financial markets that Greece risks not only bankruptcy but also departure from the euro zone, a possibility which would create chaos but which is strongly rejected by EU mainstays Germany and France.

Civil servants on Monday finalised plans for a nationwide strike on October 6, and are in talks with the country's main union, GSEE, for a full general strike against the austerity measures.