Once Again, Lenders Ask Greece for Additional Cuts

ATHENS — It has been so elaborately repeated that it almost borders on ritual: Greece’s troika of lenders leaves Athens with disagreement over whether the country should receive billions of euros in fresh financial aid.

Greek officials scramble to tackle demands for more austerity to obtain the money, even as social distress deepens.

The cycle was staged again Thursday as the Greek government tried to figure out how to meet one of the troika’s toughest requirements: designating 25,000 of the country’s 650,000 or so civil servants for eventual dismissal.

That was one of the international creditors’ demands late Wednesday as their inspectors suspended the latest examination of Greece’s economic overhaul program, leaving town and leaving Greek officials to sharpen their pencils and steel their resolve to find more budget cuts.

The mission chiefs are expected to return to Athens in early April, the troika of lenders — the European Commission, the European Central Bank and the International Monetary Fund — said in a statement on Thursday.

After a week poring through Greece’s books, representatives of the three bodies did praise Greece for making “significant” progress in mending its finances. But they said Athens needed to follow through more strictly on pledges to reduce the size of its bloated government before unlocking the next installment of Greece’s bailout allowance: a 2.8 billion euro ($3.6 billion) tranche due next month.

On Wednesday night, Prime Minister Antonis Samaras and his finance minister, Yannis Stournaras, expressed confidence that Greece would receive the money, speaking ahead of a European Union economic summit meeting in Brussels. European leaders there are trying to head off a rising anti-austerity tide while there are signs that programs like the one in Greece are retarding the bloc’s return to growth.

In the eyes of Greece’s creditors, the country has fallen short too many times on pledges to cut government spending and revamp major areas of the economy that the outside experts say Greece requires if it is to move toward financial independence.

Recently, though, Greece has shown progress. It reported a primary surplus of 1.64 billion euros for January — meaning that the government was bringing in more revenue than it was spending, excluding interest payments. It was Greece’s first primary surplus since 2002.

Further, inflation was only 0.1 percent in February, the lowest reading in 45 years. Such data have largely quieted fears that Greece could exit the euro zone.

The judiciary has also made several prominent moves in recent weeks to show it is rooting out corruption by jailing two former politicians for graft and tax evasion.

And yet Greece, which has received more than 200 billion euros in bailout loans since May 2010, is still making little headway on structural changes that creditors say must happen if the economy is ever to resume growing and become self-sustaining.

The most politically challenging moves for Greece’s coalition government involve the troika’s demands to continue cutting the number of public sector employees. Creditors said Greece had not provided enough details on how it plans to dismiss 7,000 civil servants accused of misdemeanors; to put 25,000 other workers into a special labor reserve that will eventually be eliminated; or to step up the pace of Civil Service retirements.

Until troika auditors are persuaded that Athens can hit those marks, the next aid installment may not be released.

Those measures would need to be taken even as Greek unemployment is at a record 26 percent. In the fourth quarter, nearly 1.3 million people were out of work, in a population of 10 million. Youth unemployment has surged to nearly 58 percent.

Greek consumers continue to make do with less, in response to three years of pay and pension cuts. The real disposable income of households has fallen by a third in that time, and recent increases in property taxes and the value-added tax have crimped spending.

The government reported a revenue shortfall of 260 million euros for the first two months of the year, citing increased tax evasion by citizens and businesses, and the closing of regional tax offices to trim government expenses.

And plans to privatize Greek state-owned assets to raise tens of billions of euros in revenue have stalled again. The head of the agency running that program stepped down last weekend after he was charged with breach of duty for commissioning a power plant in 2007 when he was head of the power board. It was the second such resignation in two years.

Officials say they remain hopeful, though, that some lucrative assets, including the state gambling agency, may be sold in the coming months, a step that they hope will restore confidence in the country and lure investors back to Greece.