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Greece faces bailout review, plays down public sector job losses

Greek Finance Minister Yannis Stournaras is seen in his office in Syntagma square in Athens January 16, 2013 during an interview with Reuter
Greek Finance Minister Yannis Stournaras is seen in his office in Syntagma square in Athens January 16, 2013 during an interview with Reuter

By George Georgiopoulos

ATHENS (Reuters) - Officials from the European Union and the International Monetary Fund return to Athens on Sunday to assess Greece's performance under a bailout plan as the government plays down the prospect of public sector job cuts.

The heads of the "troika" mission from the EU, IMF and the European Central Bank will meet Finance Minister Yannis Stournaras to review progress on privatizations, tax administration reforms, bank recapitalization and steps to shrink the public sector.

International lenders unlocked aid in December after Greece's coalition government adopted austerity measures to bring the bailout plan back on track, with Athens aiming for a primary budget surplus this year for the first time since 2002.

Greece's euro zone partners and the IMF have urged strict adherence to the plan to shore up public finances, a line echoed by the head of the Euro Working Group of senior officials who prepare decisions of euro zone finance ministers.

"All that was agreed in the bailout plan must be implemented. These reforms were agreed to make the Greek economy stronger, flexible and more competitive," Euro Working Group chief Thomas Wieser told Greek newspaper Realnews.

In its sixth year of recession, Greece has agreed to shrink its public sector by 150,000 by 2015 to cut its wage bill, mainly through attrition: hiring one new person for every 10 who retire.

Athens wants to avoid public sector layoffs with unemployment already at a record 27 percent and likely to rise as the economy is projected to shrink 4.5 percent this year.

But the government must transfer 25,000 employees to a so-called mobility scheme by the end of this year, where workers will earn reduced pay for a year and may face layoffs if vacant spots are not found in the broader public sector.

Finance Minister Stournaras played down talk of imminent job cuts in comments to Sunday's To Vima newspaper: "The public sector has shrunk by 75,000 people in the last one and a half years, there will be no layoffs," he was quoted as saying.

Bank recapitalization will be another topic on the agenda. Bankers have asked for an extension to an end-April deadline to wrap up a scheme to restore the solvency of the country's four biggest lenders.

Inspectors will also review steps taken to address shortcomings in tax collection and fighting tax evasion, and privatizations.

(Reporting by George Georgiopoulos; Editing by Robin Pomeroy)

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