Greek leaders 'agree' outline of budget cuts

Greece's finance minister said Wednesday the outline of a 11.5-billion-euro savings package needed to unlock EU-IMF bailout loans had been agreed, but coalition parties said cuts remained to be decided.

As striking garbage trucks blocked parts of central Athens, Prime Minister Antonis Samaras held talks on the plan to reduce the government's spending gap in 2013 and 2014 by the equivalent of $14.3 billion.

"The basic scenario has been finalised," Finance Minister Yannis Stournaras said following the talks, with only certain "minor issues" remaining.

On Tuesday, he had said the government had settled on the package of measures.

But Fotis Kouvelis, the head of the moderate Democratic Left party, told reporters after the two-hours talks that "the effort to identify the cuts continues."

He said they were trying to avoid across-the-board reductions.

Samaras has yet to convince the Democratic Left and the Socialists on the full scope of the budget measures.

The PM's coalition partners are balking at planned cuts to pensions and benefits, and reductions in the pay of army and police staff, which Samaras' party had pledged to defend before coming to power in June.

Auditors from the EU, IMF and the European Central Bank have resumed earlier this week a review of Greece's fiscal performance and plans, with the next loan instalment of 31.5 billion euros, part of a 130-billion-euro bailout from the EU and the IMF, hanging the balance.

Without the bailout funds the Greek government could quickly find itself unable to pay salaries, but it faces resistance from the public sector which has already borne the brunt of previous cost cutting measures.

Kouvelis said the government should hold off planned cuts in local council funds as council staff in Athens kicked off a two-day strike on Wednesday, claiming that municipal services were close to collapse.

"We are unable to meet our obligations," Nikos Hardalias, the mayor of the Athens district of Vyronas, told state television NET.

"Our revenue is barely enough to meet salary payments. We've sustained state cuts of 60 percent and now another cut of 28 percent is on the way," he said.

Socialist leader Evangelos Venizelos recognised that "additional cuts and sacrifices will be required but people must feel that they are effective and just."

He insisted "...there is a limit regarding low incomes and also the middle class, which must not be wiped out."

Samaras' government is also hoping to receive a two-year extension from its creditors that will enable it to spread out the spending cuts and asset sales through 2016.

Greece's European partners have reacted cooly to this idea, noting that reforms pledged earlier this year in return for the loan package are behind schedule.

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