Creditors meet Greek leaders on austerity plan

Greece's international creditors were pressing the government on Sunday to wrap up a new austerity plan to ensure the debt-crippled country stays afloat and in the eurozone. Auditors from the so-called troika of the EU, IMF and European Central Bank have been in Greece since Friday to determine whether Athens has done enough to secure the release of a vital 31.5 billion euro ($39.9 billion) loan tranche. They are due to go through the Greek proposals with Finance Minister Yannis Stournaras at a meeting from 1300 GMT, and meet Prime Minister Antonis Samaris on Monday. A favourable assessment from the auditors could also determine whether Athens wins extra time to make spending cuts in return for the badly needed loans. Athens has to finalise a new austerity programme within days to save 11.5 billion euros in 2013 and 2014 but is pleading for "breathing space", arguing that cutting spending too much too fast will only further depress the economy. A deeper than expected recession has made it even harder to meet the agreed targets and ordinary Greeks are voicing outrage at the prospect of further cuts in wages, pensions and other public expenditure. The auditors are reviewing Greece's efforts to cut its huge deficit and adopt reforms needed to help improve its economic competitiveness as agreed as part of its 130-billion-euro bailout package. The new measures reportedly include a 3.5-billion-euro slash to pensions, health cuts worth 1.47 billion euros and a 517-million-euro reduction to defence. Key state staff paid under so-called "special salary schemes" -- a group that includes police, firefighters, clerics, diplomats, judges and the military -- are also facing an average pay cut of 12 percent, according to media reports. "The key is that the government restore its credibility... and implement the necessary structural reforms," EU President Herman Van Rompuy was quoted as telling the To Vima newspaper on Sunday. Greece's conservative Prime Minister Antonis Samaras is due to meet his leftwing coalition partners at 1600 GMT to discuss the austerity measures, which have caused tensions in the government. "Our priority is a positive report from the troika," Samaris said on Saturday. "The resistance of Greeks has reached its limit, which means we need a recovery as soon as possible." He has warned that time is pressing, with economic growth forecast to shrink by seven percent this year, and a quarter of the workforce now without jobs. Thousands of Greeks took to the streets of the northern city of Thessaloniki on Saturday in protest at the new spending cuts, with one banner bluntly declaring: "The Greek people can't take any more." Violence was reported in one area, where police were pelted with projectiles and responded with volleys of tear gas and stun grenades before charging the demonstrators. Chancellor Angela Merkel of European powerhouse Germany has insisted that she wants Greece to stay in the euro despite its economic woes. "I want to say very clearly... that Greece is part of the eurozone and I want Greece to remain part of the eurozone. This guides all our discussions," Merkel said at a joint news conference with Samaras last month. Der Spiegel reported in its edition due to appear on Monday that Merkel and her advisors fear a Greek exit would trigger a domino effect akin to what followed the 2008 collapse of US investment bank Lehman Brothers.