Europe

Greece PM Antonis Samaras in tough bailout talks

  • 27 July 2012
  • From the section Europe
Antonis Samaras (R) with European Commission President Jose Manuel Barroso
Mr Barroso (L) told the Greek prime minister the government had to deliver reform as agreed

Greek PM Antonis Samaras is meeting international creditors to try to persuade them that Athens deserves its final instalment of bailout money.

The EU, IMF and European Central Bank (ECB) are studying Greece's finances before deciding whether to hand over 31.5bn euros ($38bn; £24.5bn).

Without the funds, Greece would face bankruptcy and probably leave the euro.

France and Germany say they are jointly "determined to do everything to protect the eurozone".

In a joint statement, German Chancellor Angela Merkel and French President Francois Hollande said they were "committed to the integrity of the eurozone".

They urged eurozone members and EU institutions to stick to their commitments and implement the EU's June summit decisions as quickly as possible.

Their words echoed those of ECB President Mario Draghi, who said he would do whatever was necessary to save the euro.

There are widespread doubts about Greece's future in the eurozone and this week speculation grew about a possible large-scale bailout of Spain, pushing Spanish borrowing costs to new highs.

Mr Samaras said on Thursday that his government would do all it could to get Greece back on track.

The government is preparing a two-year, 11.7bn euro cost-cutting plan, reportedly through further reductions in pension, benefits and healthcare spending.

Patience 'wearing thin'

On Friday the European Commission gave "temporary" approval to state aid that injected 18bn euros into four struggling Greek banks - Alpha Bank, EFG Eurobank, Piraeus Bank and National Bank of Greece.

But the Commission said it was still investigating the aid, to ensure compliance with EU rules. The aid plugged a hole in the banks' finances caused when private bondholders agreed to write off 107bn euros of Greek debt.

After talks with Commission President Jose Manuel Barroso, Mr Samaras said Greece's three-party coalition had decided to press ahead with measures such as privatisation and changes to the public sector.

Mr Barroso said he had been assured that the government would speed up key structural reforms such as tackling tax evasion. But he said the main issue was in the delivery of results.

"Words are not enough. Actions are much more important," he said.

The BBC's Mark Lowen in Athens says the patience of the international lenders - the troika - is wearing thin, as Greece is behind schedule in reducing its deficit.

Greece held two general elections in May and June as the country's politicians struggled to form a government.

But after two international bailouts worth 100bn euros and then 130bn euros, there is widespread scepticism that Athens will be able to meet the commitments made to secure the loans.

On Tuesday, Mr Samaras declared that the country's economy was expected to contract by 7% in 2012, more than the 5% previously forecast by the Greek central bank.