Additional wage and pension reductions for 2013-14

The economic team believes there is a convergence of views between the government and the Troika in terms of measures of taxation reform for 2014, but as it seems the cuts in costs, salaries, pensions and allowances for 2013-2014 will increase.

Members of the Finance ministry that attended the meeting between Yannis Stournaras and the auditors on Thursday evening did not hide their optimism that the pressure from the Troika will stop soon. The meetings will continue on Friday afternoon.

"It was better today. We're close. There is progress in the prerequisites. We hope to have agreed on finance issues, maybe even on the prerequisites, before the summit", a ministry member said.

Regarding the package of measures, he added that it seems to be closing at 2 billion euros, which means that the government will need to take additional fiscal measures of approximately 2.5 billion euros for 2014. The austerity measures of 2013 will hardly drop below 9 billion euros. Thus, the package will increase by almost 1.1 billion compared with the target of 7.8 billion estimated in the draft of the State budget. For 2013-2014 measures will include 4.9 billion euros in cuts to pensions. The cuts to wages and allowances will reach 1.7 billion and 1.18 billion euros respectively.

"Let us not kid ourselves, they have the upper hand on many issues. We managed to keep the cuts in benefits for the disabled which reached 300 million euros," the same source said.

Regarding the problems with the 500 million euros to banks, the Finance ministry estimates that it will be received and included in the 2012 budget. The same source denied that the Troika proposed its own measures such as poll taxes and hikes.

It is also confirmed that there will be a recession and a conditionality clause. A lot will depend on the funding gap in the extension, delays in privatizations, etc. The auditors say that the extension will worsen the recession, but the government denies this.