Greece seeking to find $14.2 bln spending cuts

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By ELENA BECATOROS, Associated Press

ATHENS, Greece (AP) — Greek finance officials on Monday held new talks on finalizing €11.5 billion ($14.19 billion) in spending cuts necessary for the country to continue receiving the international rescue loans that are protecting it from bankruptcy.

Finance Minister Yannis Stournaras met with his deputy ministers and Labor Minister Yannis Vroutsis to hammer out the measures for 2013 and 2014, ahead of a series of meetings between Prime Minister Antonis Samaras and top European officials later this week.

Stournaras said the entire package will be ready roughly within the next fortnight, before the next visit by austerity inspectors from the so-called troika of the International Monetary Fund, European Union and European Central Bank, who are monitoring Greece's efforts to right its debt-crippled economy.

He said the measures could include a new drive to place thousands of civil servants in a so-called labor reserve where they will receive reduced salaries ahead of retirement. A similar effort was abandoned last year after Greek officials decided it was not practical.

"Normally the (measures) will be ready just before the troika comes, that is at the beginning of September," Stournaras told journalists after an evening briefing with Samaras. "So every day we are working on this package and pricing the measures."

The Finance Ministry hopes to have the general outlines of the cuts finalized in time for a visit to Athens on Wednesday by Luxembourg Prime Minister Jean-Claude Juncker, who chairs the eurozone finance ministers' meetings. The prime minister then heads to Berlin and Paris on Friday and Saturday for talks with German Chancellor Angela Merkel and French President Francois Hollande.

Stournaras was non-committal on whether these talks would touch on Samaras' pre-election pledge to secure a two-year extension to Greece's austerity deadline.

"We will see, we will have a general discussion," he said.

Samaras heads a fragile three-party coalition government, formed after two elections in May and June. He and his finance chief have a delicate balancing act to pull off in deciding on how to make the spending cuts.

The prime minister has managed to persuade his coalition partners to drop their objections to the cuts, which are expected to include further reductions to salaries and pensions. Socialist party leader Evangelos Venizelos, himself a finance minister until a few months ago, said earlier in August he had backed down from demands to delay some of the cuts to avoid bringing down the new government. He insists the new measures must not be "unfair" nor "across the board."

The idea of creating a labor reserve is already creating a rift in the two-month-old coalition. Fotis Kouvelis, head of the Democratic Left party, a junior partner, said Monday that the measure "should not happen."

Stournaras insisted that the mulled plan would be an improvement on the earlier, failed version, but offered no further details.

"We are talking about a different form of labor reserve, not the way it was implemented earlier," he said.

Greece has been depending on two multibillion-euro international bailouts from other eurozone countries and the IMF since its debt crisis came broke in 2010. But despite taking a series of harsh austerity measures that saw salaries and pensions slashed and repeated rounds of tax hikes, the results have fallen short of what had been agreed upon between European and Greek officials.

The country is lagging in implementing reforms and austerity measures demanded in exchange for the rescue funds, fueling impatience in Germany — the largest single contributor to the bailouts — and other eurozone countries and speculation that Greece will have to leave the euro, the currency used by 17 European nations.

Greece's debt stands at more than €300 billion, and the economy is struggling through a fifth year of recession with unemployment at above 23 percent.

The coalition government has said it hopes to renegotiate parts of the bailout conditions, mainly seeking an extension in the two-year austerity deadline.

Germany has long said Greece should get no more leeway and must stick to its pledges.

"I have always said that we can help the Greeks, but we cannot responsibly throw money into a bottomless pit," Finance Minister Wolfgang Schaeuble said Saturday.

Juncker argued over the weekend that Greece will not leave the eurozone, saying in an interview with an Austrian newspaper published Saturday that such an event would carry unforeseeable risks and would not be politically feasible.

"In the case of a total refusal by Greece regarding budget consolidation and structural reforms, one would have to deal with the question," he said, according to the report. "But because I assume that Greece will try to redouble its efforts and achieve the targets that have been set, there is no reason to assume that this exit scenario can become relevant."

Germany's vice chancellor, Economy Minister Philipp Roesler, who takes a hard line on Greece, said recently that the idea of the country leaving the euro had "lost its horror."

Athens insists the country must remain in the euro — something which repeated opinion polls have shown the vast majority of Greeks want.

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Associated Press writer Nicholas Paphitis contributed.

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