STOCK MARKET WATCH -- Thursday, 19 July 2012

[Demeter]

8. Savings remain elusive (GREECE'S BUDGET)

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_28488_17/07/2012_452585

WHEN YOU ARE DYING OF STARVATION, THE LAST THING YOU NEED TO DO IS LOSE WEIGHT...


Prime Minister Antonis Samaras is due to meet on Wednesday morning with the leaders of the other two parties in his coalition government in a bid to finalize the 11.5 billion euros in savings for 2013 and 2014 that Greece’s lenders have demanded.

It seems likely that Samaras, PASOK leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis will not be in a position to sign off on the cuts as some ministers were less than forthcoming in their willingness to propose areas where savings could be made during talks with Finance Minister Yannis Stournaras over the last two days.

Stournaras held a second day of talks with some ministers on Tuesday but was unable to obtain the commitments to the magnitude of cuts that he needs to put together to come up with the 11.5 billion euros the European Commission, the European Central Bank and the International Monetary Fund -- collectively known as the troika -- have demanded.

The finance minister is expected to give the three party leaders a broad outline of the cuts during Wednesday’s meeting, scheduled for 10 a.m. He will indicate how much will be saved by each department without giving further details. Sources said Samaras may seek to hold telephone conversations with German Chancellor Angela Merkel and French President Francois Hollande to convey to them the difficulty that Greece is having finding the 11.5 billion euros and to inform them that the government might need more time to finalize some of the cuts....Finance Ministry sources told Kathimerini that following talks with fellow ministers on Monday, Stournaras had identified 5.6 billion euros of cuts and was trying to agree the remaining 6 billion euros yesterday. Ministry officials do not expect that these savings will have been agreed on by Wednesday’s meeting...Finance Ministry sources could not rule out Stournaras being forced to revert to “horizontal” measures, such as salary or pension cuts, or new taxes. There is also concern in Athens that the troika may ask for supplementary measures this year to make up for the government missing its deficit target.