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article imageEuropean Commission demands more austerity cuts in Greece

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By Katerina Nikolas     May 31, 2012 in World
Athens - The European Commission has warned Greece that more spending cuts need to be made if the crisis-struck nation is to qualify for any further bail-out loans.
On May 10 the European Financial Stability Facility withheld €1 billion of an agreed loan to Greece with the proviso it would be paid later "depending on the financing needs of Greece" Digital Journal reported.
Now, with only a caretaker government in place, the Troika of the EU, IMF and ECB have postponed their planned visit to Greece until a viable government has been elected.
The Financial Mirror reported the European Commission issued a statement on May 30 saying "The date of the next review mission ... depends on the political outcome of the repeated elections" but adding the date could be revised if June's election fails to produce a workable coalition government. Greece is dependent on the next tranche of funds which will now be postponed until the Troika visit Greece to conduct an audit.
Greek Reporter reported the EC went on to say that Greece must "make substantial additional expenditure cuts in the coming months" whilst stressing the need for previously agreed reforms to be implemented. If the Coalition of the Radical Left, SYRIZA, wins power in the upcoming elections then Alexis Tsipras has not only pledged to cancel austerity measures but to nationalize Greek banks and companies.
Former Greek Prime Minister Lucas Papademos who previously served as Vice President of the European Central Bank, said in an interview “Only limited readjustments can be made in the loan agreement and the new government will have limited room for maneuvering" thus reiterating the Troika position which Tsipras is so keen to defy.
Both PASOK and New Democracy have tempered their own positions over immediate spending cuts since their failure to form a coalition government, suggesting that spending cuts be spread over four to five years. Greece's immediate financial future will be determined by the outcome of the election as a victory for SYRIZA will most likely spell a Greek exit from the euro.
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