Greece agreed with its EU and IMF lenders to impose yet deeper austerity, a senior official said on Thursday, as unease grew in the ruling party that the government will try to speed the package through parliament undebated.
Athens has signed up to 6.4 billion euros ($9.26 billion) in new measures to cut its 2011 budget deficit and aims to wrap up bailout talks with international inspectors by Friday, the senior government official told Reuters, asking not to be named.
Prime Minister George Papandreou would present the main points of the government's medium-term budget plan when he meets Jean-Claude Juncker, the chairman of euro zone finance ministers, in Luxembourg on Friday, the official said.
The "troika" team from the European Union, IMF and European Central Bank, has been in Athens since early May negotiating two main points—whether the government has qualified for a fifth slice of funding under an existing 110 billion euro rescue deal, and the sustainability of Greece's 340 billion euro debt.
"Negotiations with the troika are likely to conclude late on Thursday or Friday. We are at a stage where the troika is asking for details on various issues," said the official.
"The prime minister will present the main points of the mid-term plan to Juncker, which include speedier privatizations and new measures to cut government spending and raise revenues," the official said.
The medium-term budget plan included tax increases and lower income tax exemptions, he said, expressing optimism that Greece would now receive the latest tranche of aid in time. "The discussion on additional measures of 6.4 billion euros for 2011 has been concluded, the resources have been found," he said.
'A Matter of Patriotism and Democracy'
However, unease stirred within Papandreou's Socialist party (PASOK), which has 156 seats in the 300-member parliament.
With only a few exceptions, PASOK lawmakers have so far solidly backed painful austerity measures imposed under last May's EU/IMF bailout deal, which cut civil servants' wages by about a fifth last year and pushed unemployment to record highs.
But ruling party MPs have become increasingly critical of the government, after a failure to meet budget targets under the bailout deal has led to ever more belt-tightening.
A group of 16 backbench members of parliament signed a letter to Papandreou seeking a full party debate on the package before it is goes to parliament, possibly as early as next week.
"It is not just a matter of political responsibility, logic demands that we take stock. It is a matter of patriotism and democracy," the MPs said in the letter obtained by Reuters.
Lawmaker Tonia Antoniou, who signed the letter, said this did not mean the MPs would vote against the medium-term plan but the signatories wanted a proper debate. "We must discuss all these decisions very seriously," she told Reuters.
The deputies also voiced concern at government plans to have the medium-term package decided in a single vote rather than by each article, a process that would bar dissenters from rejecting individual measures such as tax increases or privatizations.
Opinion polls published last week show PASOK losing its lead over the opposition conservatives, who want tax cuts and a renegotiation of the bailout terms.
Greece's main public sector union, ADEDY, said today it will join its private sector sister union GSEE in a nationwide strike on June 15, while thousands have gathered in central squares every night since May 25 to protest austerity.
Papandreou has so far failed to persuade the opposition to back the medium-term plan, which aims at virtually eliminating the budget deficit by 2015 and raising 50 billion euros from privatization.
Juncker chairs the Eurogroup, which must decide whether to release the 12 billion euro tranche this month to cover immediate funding needs of 13.7 billion euros—an issue which hangs on whether Athens has met budget deficit-cutting targets.
Athens needs the money not only to cover day-to-day bills but also repay maturing debt and avoid a default which could provoke a new crisis centered on holders of Greek bonds.
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