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Greek leader pledges growth as recession deepens

ATHENS, Greece — Greece's prime minister warned Tuesday that the country's battered economy is expected to contract by 7 percent this year but pledged to drag it back to growth within 18 months.

Antonis Samaras also insisted he would seek a deal with international bailout creditors "as soon as possible" to allow more time for cutbacks and reforms that are key conditions of Greece's rescue loans.

Representatives of Greece's creditors started their inspection of the country's austerity program Tuesday by holding talks with Finance Ministry officials. Today, chief inspectors from the EU, the IMF and the European Central Bank — collectively known as the troika — are due in Athens for weeks of talks ahead of their next report on Greece's austerity program, on which continued payment of the loans hinges. European Commission President José Manuel Barroso is also scheduled to visit Athens this week to hold talks with Samaras.

Debt-crippled Greece depends on rescue loans from its European partners and the International Monetary Fund to keep paying for vital public services and servicing its loans. If Athens fails to honor its pledges for further cutbacks and reforms, the cash lifeline could be severed, forcing the country to default on its obligations and potentially abandon the common European currency, the euro.

That would condemn a population reeling from 21/2 years of income cuts and job losses to further misery, as a new Greek currency would plunge in value, wiping out savings overnight and sending the cost of key imports far beyond most Greeks' reach.

Samaras told his conservative party lawmakers that his month-old coalition government must demonstrate that it respects and can implement its bailout commitments. "Next, we will show that to attain our targets some things must change, principally what aggravates and deepens the recession," he said. "Certainly, an agreement to extend the program is something that we will seek as soon as possible."

Samaras said the country's economy could contract by more than 7 percent this year, bringing the cumulative fall in output to 20 percent over the past five years. He claimed, however, that the government could bring Greece back to growth "at the beginning of 2014."

Hours after Samaras' remarks, the government announced a list of 21 state-run agencies due to be merged or abolished, including several public training and research institutes. About 5,200 workers at those agencies are to be transferred to other government jobs.

Greece's calls for an extension on the deadline for its austerity measures — from 2014 to 2016 — have not been welcomed by European governments. The country's creditors are becoming more exasperated with delays and broken pledges from Athens. Some seem inclined to cut their losses and allow Greece to drop out of the 17-member eurozone.

Greek leader pledges growth as recession deepens 07/24/12 [Last modified: Tuesday, July 24, 2012 9:09pm]
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