Greece sees 'difficult years ahead' as EU-IMF talks begin
New Greek Finance Minister Yannis Stournaras warned on Thursday that the country's recovery plan was "off-track" and Greece faced "difficult years ahead" as sensitive talks with EU-IMF creditors began.
Stournaras spoke just after the first meeting between EU-IMF auditors and Prime Minister Antonis Samaras, who is eager to press the case that an exhausted Greece urgently needs a reprieve from creditor-mandated austerity.
The officials from the EU, International Monetary Fund and the European Central Bank are in Athens to monitor Greece's progress in the implementation of the reforms agreed in return for the bailout agreed in March.
Samaras, whose government is to be confirmed in power with a weekend confidence vote in parliament, told auditors he was determined to "speed up structural reforms", but his three-party coalition has made plain its desire to revisit the deal.
New finance minister Stournaras, sworn in earlier on Thursday, warned the road ahead would be difficult.
"The programme is in fact off-track in certain areas," Stournaras told reporters.
"Difficult years lie ahead, I see light at the end of the tunnel but patience is required," he added.
Crisis-hit Athens is now drawing funds from a 130-billion-euro ($164 billion) lifeline but Samaras and his allies want to renegotiate the agreement to avoid further job losses and put more emphasis on growth rather than austerity.
"It is our decision to avert further sacrifices at all cost because Greeks cannot take any more," government spokesman Simos Kedikoglou told Real FM radio.
In the talks with the so-called 'troika' of auditors, the new administration will point to worsening economic data in an attempt to argue for an easing in salary and pension cuts.
Under the current terms of its bailout, Greece must adopt further cuts worth 11.5 billion euros by 2013 and reduce the state payroll by 15,000 people in 2012.
The new government wants to soften the blow, mindful of rising anger in Greece after over two years of austerity failed to restore the economy to health.
Spokesman Kedikoglou said the government held "undeniable data on the current condition of the Greek economy" and that EU partners "will understand that there is no sense in pursuing certain measures."
The Greek economy is in its fifth year of recession and officials warn that it could contract by 6.7 percent in 2012, much worse than an earlier forecast of 4.5 percent.
Horst Reichenbach, the head of an EU mission devoted to overhauling Greece's public administration that stands apart from troika auditors, warned Wednesday that Greek businesses were suffering badly.
"Conditions are particularly hard with demand falling over 25 percent and investment down over 40 percent," Reichenbach said.
Greek officials admit that little was done in the past two months as the country held two elections before a workable government could emerge, a situation that has rankled officials who have power over Athens' purse strings.
"I'm not in a negotiations or renegotiations mood at all, we are in a fact-finding mood," IMF chief Christine Lagarde told CNBC on Tuesday.
"I'm very interested in seeing what has been done in the last few months, in terms of complying with the programme," Lagarde said of the Greek situation.
Swedish Finance Minister Anders Borg warned that efforts to prevent Greece from going bankrupt appeared doomed to fail.
"The most probably outcome is that you end up with some kind of default in Greece," he said, but added that Athens might still manage to hold on to the euro.
Finance minister Stournaras said he had been warned by auditors to expect a grilling at a meeting with eurozone finance ministers next week.
"I was told to expect a difficult day on Monday at the Eurogroup," the minister said.
Thursday was the prime minister's first day at government headquarters after undergoing major eye surgery that sidelined him for two weeks.
A wan-looking Samaras earlier on Thursday stood by as his new finance minister Yannis Stournaras took his oath of office.