Greece needs bridging loan, scrambles for more cuts

Tue Jul 17, 2012 3:33pm EDT
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By Lefteris Papadimas and Harry Papachristou

ATHENS (Reuters) - Greece's coalition government will seek a bridging loan to tide it over while it scrambles to find 11.7 billion euros of spending cuts to bring a derailed bailout plan back on track and appease exasperated international lenders.

The measures must be submitted for approval by July 24, when auditors of the so-called "troika" of the European Union, the International Monetary Fund and the European Central Bank are expected to return to Athens for a check-up mission.

The visit, and subsequent haggling that is expected to last until September, will determine whether the EU and IMF continue bank rolling Athens or abandon it and let it slide towards chaotic default and eventual exit from the euro zone.

The troika has already turned the screws on cash-strapped Athens, effectively suspending payments under its ongoing 130 billion euro rescue and prompting it to seek a bridging loan from its lenders to cover financing needs until September.

"We are fighting to secure the bridging loan by September," a finance ministry official told reporters, speaking on condition of anonymity.

Cabinet members and senior ministry officials have been holding daily meetings to thrash out the spending cuts. Finance Minister Yannis Stournaras is expected to submit on Wednesday a draft list to the leaders of the three parties comprising the country's ruling coalition.

"Since last Thursday, there is a methodical effort by all ministers to find realistic proposals," Deputy Finance Minister Christos Staikouras told Reuters. "We must be ready by July 23," he added.

The cuts, equivalent to 5.5 percent of the country's GDP, must be enforced over the next two years for Greece's budget deficit to narrow to below 3 percent of GDP by the end of 2014 from 9.3 percent in 2011.   Continued...