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Greece looking for more cuts

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Aug. 7, 2012, 6:10 p.m. | World — by Associated Press

Greece has still to find up to €4 billion ($5 billion) worth of cuts to satisfy the demands of its international creditors.
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ATHENS, Greece — Greece has still to find up to €4 billion ($5 billion) worth of cuts to satisfy the demands of its international creditors, the country's finance minister said Tuesday.

The debt-ridden country has promised to slash €11.5 billion ($14.1 billion) off its 2013-14 budget in order to continue receiving emergency rescue loans from other eurozone countries and the International Monetary Fund.

"We are not there yet, we still have €3.5 billion to €4 billion to cover," Finance Minister Yannis Stournaras said.

Debt inspectors from the IMF, European Union and European Central Bank concluded a new round of austerity negotiations in Athens at the weekend, and are set to return in early September to finalize the latest round of cuts.

The cuts will be identified by the seven-week-old coalition government as the country battles a fifth year of recession, with unemployment nearing 24 percent, according to a recent government estimate.

Last week, the three parties participating in the coalition — the conservative New Democracy, the Socialist PASOK party and the small Democratic Left party — overcame a dispute on whether some of the cuts should be delayed. The three parties, averting a new political crisis, agreed to back conservative Prime Minister Antonis Samaras and not seek any delay in the new austerity program.

Greece has also promised to reduce its 750,000-strong workforce in public administration and the broader public sector by 150,000 by the end of 2015.

But Stournaras on Tuesday said the new government was experiencing "difficulties in reaching that number" and said it had not ruled out re-introducing a scheme to suspend public servants on reduced pay before they reach retirement age.

The campaign was scrapped earlier this year as being ineffective, and the previous government insisted the target could be reached through attrition. The scheme was first introduced last year to sidestep legal hurdles in firing civil servants and to avoid aggravating unemployment any further.

Stournaras insisted Tuesday that the government has no plans to fire any of its workers.

The Greek recession has worsened since the country was shut out of long-term debt markets in 2010. But it has maintained a market presence through regular treasury bill auctions.

On Tuesday, the government raised €812 million ($1 billion) in a 26-week T-bill sale. The country's public debt management agency says the sale was 2.06 times oversubscribed and carried a yield of 4.68 percent, slightly down on the 4.7 percent rate last month.

Shares on the Athens Stock Exchange, meanwhile, closed up 1.95 percent at 620.46 following an announcement by the government that it would take legislative action to speed up its long-delayed privatization program.

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