Greek coalition government wrestles with new cuts

Associated Press
Protesters gather outside Bank of Greece with the banner reads ''No'' in Athens, Monday, June 30, 2012.  The state-run bank was privatized last week, in a no-cash transfer to the private Piraeus Bank. Bank workers on Monday held a 24-hour strike to protest cuts under Greece austerity program. (AP Photo/Thanassis Stavrakis)
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ATHENS, Greece (AP) — The three parties in Greece's new coalition government resumed talks Monday to try and decide on a major new package of budget savings demanded by rescue lenders as a condition for continued bailout financing.

Conservative Prime Minister Antonis Samaras was conferring with junior coalition partners who have so far declined to sign off on Cabinet-level proposals for the new €11.5 billion ($14.1 billion) package for 2013-14.

Government spokesman Simos Kedikoglou refused to rule out new pension and salary cuts.

"I cannot rule out anything that has not been decided. This €11.5 billion guarantees our access to far greater amounts of money ... So there is pressing need to come up with that 11.5 billion," Kedikoglou told private Antenna television.

Debt inspectors from the European Union, European Central Bank and International Monetary Fund — known as the troika — also resumed meetings with government officials to try and finalize the new austerity measures.

Kedikoglou said the government, formed after a general election last month, was fighting to regain the country's international credibility after Greece repeatedly missed fiscal targets set under bailout agreements.

"For two and a half years, we haven't made any (target). What we are striving to do with structural reforms is to create a simpler and more effective government," Kedikoglou said.

"Greece's course in Europe is at a critical moment ... Greece's priority is to regain credibility."

Shares on the Athens Stock Exchange, meanwhile, were boosted by gains in Europe. Greek banking shares in particular were rallying after the government announced Friday it will sell state-run ATEBank to Piraeus Bank. ATEBank's weak investments will remain under state control.

Piraeus Bank said Monday the deal cost it €95 million ($116.3 million).

The general index in Athens closed up 2.3 percent, with banking sector shares up nine percent.

ATEBank's employees' association launched rolling 24-hour strikes to protest the deal. The Greek Federation of Bank Employee Unions, OTOE, went ahead with a 24-hour strike to protest cuts made under Greek austerity measures.

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