ATHENS, Greece — Finance Ministry officials said Sunday that international debt inspectors will help Greece prepare a package of spending cuts and policy changes so it can keep getting billions in bailout funds crucial to its economy.
Members of the so-called troika were originally due to leave at the end of July and return at the end of August to complete a review on progress of the government’s budget cuts for this year and plans for 2013 and 2014, a Greek Finance Ministry official said in an e-mailed statement. That would have led to a significant delay in the next disbursement of loans to Greece, said the official, who asked not to be identified.
The official said the debt inspectors will assist in identifying budget savings. They will then depart Athens to write the review that will open the way for the payment of the funds, he said.
Three other officials confirmed the plan Sunday. They requested anonymity because they were not authorized to speak on the record.
Prime Minister Antonis Samaras and his coalition partners, Evangelos Venizelos of Pasok and Fotis Kouvelis of Democratic Left, are to meet again today to determine the savings required to receive the funds pledged under Greece’s two rescue packages.
The officials told reporters that International Monetary Fund representative Poul Thomsen assured Finance Minister Yannis Stournaras on Friday that the inspectors would stay and that experts in their delegation would help Greece find places to cut spending and ways to boost revenue for a package worth about $17.9 billion.
The inspectors are supposed to issue a report on Athens’ progress in September.
Greek coalition leaders have agreed on most of the austerity measures demanded by creditors and are now considering pension and wage cuts to find the final $1.8 billion of savings still needed, Reuters reported Sunday, citing an unidentified individual close to the talks.
Greece, which held consecutive elections in May and June as public opposition to spending cuts grew, risks running out of money without the disbursement of about $5.2 billion due last month as the first installment of a $38 billion transfer.
If Greece doesn’t stick to its agreements, there’s no other solution than for it to leave the euro area and introduce its own currency to regain competitiveness by devaluation, Hermann Otto Solms, deputy president of Germany’s lower house of Parliament, told the German business magazine WirtschaftsWoche in an interview published Sunday.
Citigroup Inc. said last week there’s now a 90 percent chance Greece will leave the euro in the next 12 months to 18 months.
Elsewhere in Europe, German and Italian leaders issued a new pledge to protect the eurozone, while the influential eurogroup chairman was quoted Sunday as saying that officials have no time to lose and will decide in the coming days what measures to take.
The weekend comments capped a string of assurances from European leaders that they will do everything they can to save the 17-nation euro. They came before markets open for a week in which close attention will be focused on Thursday’s monthly meeting of the European Central Bank’s policy-setting governing council.
Last Thursday, European Central Bank President Mario Draghi said the bank would do “whatever it takes” to preserve the euro - and markets surged on hopes of action.
German Chancellor Angela Merkel and Italian Premier Mario Monti “agreed that Germany and Italy will do everything to protect the eurozone” in a phone conversation Saturday, German government spokesman Georg Streiter said, a statement that was echoed by Monti’s office.
That was nearly identical to a statement issued Friday by Merkel and French President Francois Hollande, which followed Draghi’s comments.
Though they didn’t pledge any specific action, the comments raised expectations that the European Central Bank might step in to buy Spanish and perhaps Italian government bonds to lower the countries’ borrowing costs, which have been worryingly high in recent weeks. Another possibility might be for the eurozone’s temporary rescue fund, the European Financial Stability Facility, to buy bonds.
“What measures we will take, we will decide in the coming days,” Jean-Claude Juncker, the Luxembourg prime minister who also is the chairman of meetings of the eurozone finance ministers, or eurogroup, was quoted as telling the German daily Sueddeutsche Zeitung. “We no longer have any time to lose.”
Italy and Spain have the eurozone’s third- and fourth-largest economies, respectively, behind Germany and France.
Merkel and Monti agreed that decisions made by last month’s European Union summit “must be implemented as quickly as possible,” Streiter said, again echoing Friday’s Merkel-Hollande statement.
Those included allowing Europe’s bailout fund - once a new, independent bank supervisor is set up - to give money directly to a country’s banks, rather than via the government. Countries that pledge to implement changes demanded by the EU’s executive commission also would be able to tap rescue funds without having to go through the kind of austerity measures demanded of Greece, Portugal and Ireland, which have had to get international bailout packages.
“I have no doubt that we will implement the decisions of the last summit,” Juncker was quoted as saying. “It still has to be decided what exactly we will do when. That depends on the developments of the coming days and how fast we have to react.
“When I say ‘we,’ I mean the EFSF rescue fund - that means the 17 euro countries,” Juncker was quoted as saying. He added that they would coordinate closely with the European Central Bank - “and we will, as Draghi says, see results.”
“I don’t want to raise expectations,” he said. “But I must say that we have arrived at a decisive point ... the euro countries have arrived at a point where we must make extremely clear with all available means that we are determined to ensure the financial stability of the currency union.” Information for this article was contributed by Geir Moulson and staff members of The Associated Press and by Maria Petrakis of Bloomberg News.
Front Section, Pages 1 on 07/30/2012