Greek hopes fade for quick deal on austerity cuts

Wed Oct 3, 2012 2:26pm EDT
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By Dina Kyriakidou and Lefteris Papadimas

ATHENS (Reuters) - Greece's hopes of striking a deal with its lenders before euro zone finance ministers meet next week dimmed on Wednesday, when officials admitted the two sides disagree on how much the economy will contract in 2013 - a key figure in their calculations.

After weeks of talks, Athens is still struggling to clinch an agreement on nearly 12 billion euros of cuts with the "troika" of European Central Bank, European Commission and International Monetary lenders, who fear some of the proposed savings are not feasible.

"There is still a large gap. We are trying to reach a compromise to seal a deal," Finance Minister Yannis Stournaras told reporters after meeting the troika heads.

A senior government official said that there was still ground to cover on about 2.5 billion euros worth of measures to be applied next year.

The official added that there was also disagreement on how much the economy would shrink next year, which has implications for all of the other targets.

"There is disagreement on the macroeconomic scenario. We project a recession near 4 percent, they're (troika) at 5 percent," said the official, who declined to be named.

Officials said not all hope was lost that the Greek government would resolve issues before next Monday's meeting of ministers, easing Athens's efforts to secure an already delayed 31.5 billion euro tranche of aid needed to avoid bankruptcy.

But it was increasingly likely the troika chiefs would return next week to continue their inspection.   Continued...