ATHENS—Visiting international inspectors on Sunday rejected parts of Greece's proposed austerity plan, forcing the country's coalition government to seek fresh spending cuts to meet creditors' demands.
The inspectors rejected some €2 billion ($2.6 billion) of proposed spending and revenue measures the government had hoped would help meet budget targets for the next two years, Greek officials said.
Party leaders from the three-way coalition—made up of the conservative New Democracy, socialist Pasok and Democratic Left parties—will meet Wednesday to try to find a compromise.
Fotis Kouvelis, the head of the coalition's junior partner, the Democratic Left, said after a meeting at the prime minister's office that "nothing has been decided" and said Greeks had reached the limits of their endurance with the austerity measures.
Earlier Sunday, Greece's finance minister and officials from the European Commission, International Monetary Fund and the European Central Bank—the so-called troika—met to discuss the new measures, with all saying the meeting, which followed a monthlong summer break, had been positive.
"It was a good meeting," said Poul Thomsen, the IMF's mission chief. But the troika and Greek finance-ministry officials also emphasized that the talks were expected to last several weeks. "We are only at the beginning," said a senior finance-ministry official.
"The troika will stay here for a while." The troika is demanding €13.5 billion in budget cuts in exchange for its latest €173 billion bailout.
They are the latest in a series of austerity measures Greece has taken over the past 2½ years to close a yawning budget deficit and that have driven the economy into a recessionary tailspin, sent unemployment to record highs and pushed the purchasing power of salary earners down to levels not seen since 2003.
On Saturday, tens of thousands of demonstrators marched through the streets of the northern city of Thessaloniki, the first large-scale protest against the austerity measures, which foresee steep cuts in pensions, health-care spending and public workers' salaries.
Police said some 30,000 to 35,000 protesters took part in five marches called by unions and left-wing organizations.
Marching through the city center, the demonstrators chanted slogans denouncing the coming cutbacks and carrying banners that read: "Stop the Neo-Liberal Policies" and "We want work, not unemployment."
The protests mark the first real test of popular sentiment since Greece's coalition government took office after tough June elections.
In an effort to win credibility with foreign creditors, coalition partners say they are determined to make the cuts, but they also run counter to what the partners promised voters three months ago when they campaigned on promises to ease Greece's austerity program.
The finance-ministry official played down the troika's objections. "There were some objections, but they were expected," said the official. "Some of the measures, the troika wants further details so they can understand them better."
Greece is counting on a positive report card from the troika in order to secure its next tranche of aid. If the inspectors sign off on the latest cuts and are convinced of Greece's overhauls, Athens will get €31.5 billion next month, much of which will go to recapitalizing Greece's teetering banking sector.
The troika report, to be delivered before a European finance ministers' meeting Oct. 8, will also play a role in determining whether Greece is able to win a sought after two-year extension in meeting tough budget-deficit targets.
Greece's government has made that extension a centerpiece of its policy platform, hoping to spread out the cuts and ease the country's adjustment.
wsj.com
The inspectors rejected some €2 billion ($2.6 billion) of proposed spending and revenue measures the government had hoped would help meet budget targets for the next two years, Greek officials said.
Party leaders from the three-way coalition—made up of the conservative New Democracy, socialist Pasok and Democratic Left parties—will meet Wednesday to try to find a compromise.
Fotis Kouvelis, the head of the coalition's junior partner, the Democratic Left, said after a meeting at the prime minister's office that "nothing has been decided" and said Greeks had reached the limits of their endurance with the austerity measures.
Earlier Sunday, Greece's finance minister and officials from the European Commission, International Monetary Fund and the European Central Bank—the so-called troika—met to discuss the new measures, with all saying the meeting, which followed a monthlong summer break, had been positive.
"It was a good meeting," said Poul Thomsen, the IMF's mission chief. But the troika and Greek finance-ministry officials also emphasized that the talks were expected to last several weeks. "We are only at the beginning," said a senior finance-ministry official.
"The troika will stay here for a while." The troika is demanding €13.5 billion in budget cuts in exchange for its latest €173 billion bailout.
They are the latest in a series of austerity measures Greece has taken over the past 2½ years to close a yawning budget deficit and that have driven the economy into a recessionary tailspin, sent unemployment to record highs and pushed the purchasing power of salary earners down to levels not seen since 2003.
On Saturday, tens of thousands of demonstrators marched through the streets of the northern city of Thessaloniki, the first large-scale protest against the austerity measures, which foresee steep cuts in pensions, health-care spending and public workers' salaries.
Police said some 30,000 to 35,000 protesters took part in five marches called by unions and left-wing organizations.
Marching through the city center, the demonstrators chanted slogans denouncing the coming cutbacks and carrying banners that read: "Stop the Neo-Liberal Policies" and "We want work, not unemployment."
The protests mark the first real test of popular sentiment since Greece's coalition government took office after tough June elections.
In an effort to win credibility with foreign creditors, coalition partners say they are determined to make the cuts, but they also run counter to what the partners promised voters three months ago when they campaigned on promises to ease Greece's austerity program.
The finance-ministry official played down the troika's objections. "There were some objections, but they were expected," said the official. "Some of the measures, the troika wants further details so they can understand them better."
Greece is counting on a positive report card from the troika in order to secure its next tranche of aid. If the inspectors sign off on the latest cuts and are convinced of Greece's overhauls, Athens will get €31.5 billion next month, much of which will go to recapitalizing Greece's teetering banking sector.
The troika report, to be delivered before a European finance ministers' meeting Oct. 8, will also play a role in determining whether Greece is able to win a sought after two-year extension in meeting tough budget-deficit targets.
Greece's government has made that extension a centerpiece of its policy platform, hoping to spread out the cuts and ease the country's adjustment.
wsj.com
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