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Greece Holds Out Hope for 2013 Budget Target

By Associated Press - Apr 16, 2013 at 10:15AM

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"We still face a hard road ahead, until Greece can access markets again," Yannis Stournaras told a press conference.

ATHENS, Greece (AP) -- Greece's finance minister pledged Tuesday to stick with unpopular austerity measures and correct years of profligate state spending, in the hope of securing a budget surplus this year that could pave the way for a new debt reduction deal.

"We still face a hard road ahead, until Greece can access markets again," Yannis Stournaras told a press conference. "But we have covered at least two thirds of the way, as far as fiscal adjustment goes, and three quarters of the way on competitiveness."

Stournaras was speaking a day after Greece struck a deal with creditors expected to secure it 8.8 billion euros in further loan payments from its international creditors. The deal followed weeks of tough negotiations and will include a taboo-breaking 15,000 layoffs in the public sector.

The minister told the press conference Tuesday that the country's next main target is to achieve a primary surplus -- which excludes the cost of servicing the huge public debt -- on its budget in 2013, a year ahead of target. Athens hopes that by reaching this milestone, it will get further debt relief from its creditors.

The country has been locked out of international bond markets after its economy imploded in 2010, and been kept afloat by rescue loans from its European partners and the International Monetary Fund. In exchange, it has implemented harsh and deeply resented austerity measures, slashing incomes, hiking taxes, and overhauling an inflated, largely inefficient public sector.

The cutbacks fueled a deep recession, now in its sixth year, while pushing unemployment to a record 27 percent. Almost 1,000 jobs have been lost every day over the past three years in the private sector.

The main left wing opposition leader, Alexis Tsipras, said the measures have left "social wreckage" in their wake, and urged action to revive the economy.

"How can they say our sacrifices are paying off when the country is slumped in recession and the public finances are being destroyed?" the Syriza party head said at a business conference. "Every year, recovery is delayed until the following year."

Tsipras said Greece needs an immediate change of course, "the same way a heart attack patient needs an electric shock."

Labor unions have reacted with a series of general strikes and demonstrations that often ended in street riots but failed to put the brakes on austerity.

On Tuesday, Greek islands were left without ferry links with the mainland due to a 24-hour strike by seamen, while state railway workers were also to hold brief work stoppages.

Monday's deal with the creditors included 15,000 layoffs in the public sector, which was for decades considered a secure and undemanding work environment where nepotism ran rife. However, the government will be allowed to break a hiring freeze and replace all sacked employees.

Stournaras said legislation on the agreed measures would be passed "the soonest possible" to ensure payment of the loan installments.

He said a further priority was to complete by the end of this month the recapitalization of Greece's banking sector, which took bad losses from last year's public debt writedown. Ministry and banking officials say some 20 billion euros in deposits have returned to domestic lenders after a strong outflow during political instability last summer.

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