GREECE | 23.11.2010

Greece on fiscal track, but must make deeper cuts, lenders say

In deep water, Greece gets new financial lifeline

Greece has gained approval for the next installment from an EU and IMF financial rescue package, but lenders have demanded even tougher austerity measures.

After doubts were voiced in the last two weeks that Greece may not be eligible for another piece of the financial rescue pie, Athens moved to pledge new efforts to meet the terms of a 110-billion euro ($151 million) bailout.

International lenders on Tuesday said they would help, but prescribed an even stricter regimen for Greece to regain financial stability.

The International Monetary Fund and the European Union both stressed that Greece would have to cut waste from its health care system and state-owned companies and take tougher action on tax evasion to merit another payout from the rescue fund.

Greece ‘largely on track'

EU and IMF auditors, who had been to Greece to assess the country's fiscal progress, said the program was at a crossroads.

The auditors said that Greece was "largely on track" with reforms and approved the release in December of nine billion euros in rescue funds.

The approval of the third tranche of the bailout money had been delayed by a day because negotiations on deeper cuts were continuing.

A fourth and bigger slice of aid, totaling 15 billion euros, is due in March, but would depend on progress made with the latest requested measures to combat Greece's massive budget deficit and national debt.

The auditors, however, also did not rule out extending the repayment timetable, or providing an additional loan to Greece.

Author: Gregg Benzow (AFP, Reuters)
Editor: Nancy Isenson

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