ATHENS, Greece – Parties in Greece's coalition government have reached broad agreement on a major new austerity package demanded by the country's creditors but are still negotiating over the fine print, the country's finance minister said Wednesday.
Yannis Stournaras said officials from the three parties in the conservative-led coalition would hold further talks to settle remaining "technical" issues.
"The basic scenario has been finalized, there are one or two minor issues that remain unresolved," Stournaras said after attending Prime Minister Antonis Samaras' meeting with the heads of the Socialist PASOK and Democratic Left parties.
The two-month-old government has been deliberating for weeks on how to save some €11.5 billion ($14.4 billion) in 2013 and 2014. The cutbacks form part of Greece's bailout commitments to its European partners and the International Monetary Fund, who have protected the country from bankruptcy since May 2010 in exchange for a harsh austerity program designed to reduce yawning budget deficits.
Austerity inspectors from the so called troika — the European Union, IMF and European Central Bank — are due in Athens early next month for a fresh overview of the country's efforts. Hinging on a favorable report is the next rescue loan installment worth some €31 billion. If the troika finds Greece has been falling back on its commitments and halts the installments, the country will run out of cash and faces leaving the eurozone, triggering further financial chaos across the 17 countries that use the common currency.
The new cutbacks are expected to include further reductions in pensions and broader civil service pay cuts. Both would be politically embarrassing for the two center-left coalition partners who campaigned in Greece's two recent elections with promises to avoid new across-the-board income cuts.
The head of Greece's main GSEE union said the new measures would further harm salaried workers and pensioners.
"I much fear that (coalition partners) have forgotten what they said before the elections about (such) measures being unfair, disproportionate and inefficient," GSEE head Yiannis Panagopoulos said.
It took three meetings with Samaras earlier this month for PASOK and Democratic Left to grudgingly agree to work on the new measures.
Democratic Left leader Fotis Kouvelis told reporters after Wednesday's talks that fine-tuning would continue.
"Efforts are being made to avoid horizontal cuts, which I strongly oppose, and to protect lower income-earners from further pain," he said.
Since the country's debt crisis broke in late 2009, Greeks have had to deal with repeated income cuts and tax hikes, which have largely contributed to the country's four-year recession. At the end of this year, the cumulative economic contraction since 2008 is expected to reach 20 percent. Tens of thousands of businesses have closed, and unemployment is above 23 percent — with more than one in two young workers jobless.
Kouvelis said he opposed cuts in local authority funding and in farmers' pensions. He has also disagreed with proposals to suspend thousands of civil servants — who are guaranteed jobs for life — on reduced pay ahead of retirement.
Kouvelis said the three party leaders would hold new talks in coming days.
But a finance ministry official said a political agreement has been reached in broad terms, and the austerity package would be presented to senior troika inspectors when they arrive in Athens next month.
The final version must be approved by Parliament where the three coalition parties enjoy a strong majority, controlling 178 of the 300 seats. The vote is expected to trigger protests, as labor unions and anti-austerity parties virulently oppose further austerity. Many previous demonstrations have turned violent, resulting in extensive vandalism and destruction of property in central Athens.
"We have no other option than industrial action ... if they try again to place the burden of the crisis on wage earners and pensioners, who are not responsible for the crisis," GSEE's Panagopoulos said.
On Wednesday, more than 1,000 municipal employees protested peacefully against new cuts in government funding for local authorities.