Greece leader warned by Europe to deliver cuts promised by predecessor

Published on 28/07/2012 00:00

International austerity inspectors pressed Greece’s prime minister yesterday to implement harsh cost-cutting reforms Antonis Samaras, whose conservative-led coalition came to power just over a month ago, is under intense pressure to stick to his predecessors’ austerity commitments, and find new areas to make cuts.

Officials from the European Union, International Monetary Fund and European Central Bank started a new scrutiny of Greece’s austerity programme this week.

If their report, expected in September, is damning, Athens could stop receiving its rescue loans and face a disorderly bankruptcy and exit from the euro.

The debt-crippled country has been surviving on international bailouts since May 2010. To secure them, it imposed deeply resented spending cuts, slashing incomes and salaries while hiking taxes.

Government spokesman Simos Kedikoglou said the inspectors, who represent Greece’s bailout creditors, briefed Mr Samaras on “the initiatives that must be taken to ensure the national programme is brought back on track.”

The hour-long meeting in Athens came a day after EU Commission president Jose Manuel Barroso exhorted Mr Samaras to “deliver, deliver, deliver” on Greek promises.

As part of its austerity efforts, Greece has achieved a remarkable reduction of its budget deficit from 15.8 per cent in 2009 to 9.1 per cent last year. However, the country is considerably off-target in other areas of reform.

Athens largely blames this on a deeper-than-anticipated recession, which could see its economic output fall by more than 7 per cent this year. That would bring the total economic contraction over the past five years to a crippling 20 per cent.