Greece wins ‘positive’ report, Merkel to defend austerity

Eurozone finance ministers will mull next steps to bring Greece back from the brink of bankruptcy Monday after Athens received a “positive” report card from its international creditors. Greece has “delivered” on its economic reform pledges and a long-awaited report from its “Troika” of creditors — European Union, European Central Bank and International Monetary Fund — is “positive”, said Jean-Claude Juncker, who heads the Eurogroup of finance ministers. The payment of a key 31.2-billion-euro tranche of funds to stave off bankruptcy in Greece has been held up since June pending judgment on the credibility of its economic reforms by the Troika. Arriving for talks between the 17 eurozone finance ministers later in the day, Juncker said they finally received the report Sunday night and it “is positive in its fundamental tone because the Greeks really delivered. Now it is for us to deliver.” The Luxembourg premier said a new austerity package adopted Wednesday and a cost-cutting 2013 budget agreed late Sunday were “very ambitious” and “fulfills our wishlist nearly completely.” He said however that there would be “no definitive decision” today on the release of funds, which Prime Minister Antonis Samaras had said were needed by Friday to save Greece from going broke. Monday’s talks come after the Greek parliament, despite noisy protests, agreed a tough cost-cutting 2013 budget that further slashes pensions and wages, the latest hurdle cleared by Athens to win foreign aid so it can stay afloat. Last week lawmakers also adopted a new austerity package that drew 70,000 angry demonstrators into the streets against police. As a Spanish savings bank this weekend halted home-owner evictions after a second customer’s suicide in two weeks, concerns are mounting over the local and global impact of the tough austerity measures being implemented across Europe. In Portugal, trade unions and opposition parties plan to take to the streets to protest a visit by German Chancellor Angela Merkel, the leading proponent of spending cuts as the answer to end the euro debt crisis. “Of course a programme of its kind sparks major debate,” Merkel said of Lisbon austerity moves that sent thousands of soldiers into the streets this weekend. “It is a long and hard process and I know it requires many sacrifices,” she told Portuguese television. The new Greek budget provides for a deepening of the worst recession seen by a European nation in modern history. Debt is likely to rise to 189 percent of GDP next year, almost double the country’s national output, with growth tipped to shrink by 4.5 percent. “The country is at its limits,” said Evangelos Venizelos, leader of the Socialist Pasok party which is part of the governing coalition. And Monday, Japan too showed signs of slumping in the face of slowing global demand, with its economy shrinking in the July-September quarter. Facing a recession which has shrunk the economy by a fifth, Samaras has warned the country cannot take any more austerity and must have growth. Given what Greece has done to meet demands from its creditors, there have been discussions on giving Athens a two-year extension to 2016 to meet its targets for reducing its mountain of debt and bring its public deficit under 3.0 percent of GDP. “Do we give them two more years or not? I am in favour of doing that,” Juncker said. But he admitted that if there were a decision to give Athens a two-year extension “from that emerges financing questions, if not a gap.” The gap has been estimated at up to 30 billion euros, a substantial sum as bailout-weary nations such as Germany, Finland and the Netherlands grow increasingly reluctant to rescue weaker euro states. Any decision to extend Greece’s deadline would also require parliamentary approval in Germany, the Netherlands and Slovakia. Though Samaras had said Athens could run out of money by November 16 failing the release of the 31 billion euros in aid, the country announced Friday that it would sell short-term bills the same day, seeking to cover maturing debt.