Greece has agreed to 6.4 billion euros in new steps to cut its 2011 budget deficit and aims to wrap up bailout talks with international inspectors by Friday, a senior government official told Reuters on Thursday.
Prime Minister George Papandreou would present the main points of the government's medium-term budget plan when he meets Jean-Claude Juncker, the chairman of euro zone finance ministers, in Luxembourg on Friday, the official said.
The troika team from the European Union, IMF and European Central Bank, has been in Athens since early May negotiating two main points -- whether the government has qualified for a fifth slice of funding under the existing 110 billion euro rescue deal and the sustainability of Greece's 340 billion euro debt.
Negotiations with the troika are likely to conclude late on Thursday or Friday. We are at a stage where the troika is asking for details on various issues, said the official, who did not want to be named. The medium-term budget plan included tax increases and lower income tax exemptions, he added.
The discussion on additional measures of 6.4 billion euros for 2011 has been concluded, the resources have been found.
PAPANDREOU MEETS JUNCKER
Juncker chairs the Eurogroup which must decide whether to release the 12 billion euro tranche this month to cover immediate funding needs of 13.7 billion euros -- an issue which hangs on whether Athens has met budget deficit cutting targets.
The prime minister will present the main points of the mid-term plan to Juncker, which include speedier privatizations and new measures to cut government spending and raise revenues, said the official.
Greece and the inspectors made a late push on Thursday to agree the funding to keep Athens afloat.
The measures include lowering the income tax exemption, terminating other exemptions and possibly taxes on soft drinks and natural gas, said the official.
He was hopeful on the latest tranche of aid for the government to repay maturing debt and cover day-to-day bills. From the overall picture on the talks so far, I am optimistic that we will get the fifth installment, he said.
Greece's original bailout agreed a year ago assumes that the government can resume borrowing on financial markets in 2012.
But credit ratings agency Moody's Investors Service knocked a final nail into the coffin of that idea late on Wednesday, slashing Greece's credit rating by three notches to the same level as communist Cuba.
(Additional reporting by Ingrid Melander and George Georgiopoulos in Athens; Writing by David Stamp, editing by Mike Peacock)