Greek FinMin denies debt review talks broke down

By the Associated Press | September 2, 2011 | 6:05 AM EDT

ATHENS, Greece (AP) — Greece's finance minister rejected on Friday reports that the country's international debt review has been suspended due to a break-down in talks, saying the pause was scheduled.

Inspectors from the International Monetary Fund, the European Commission and the European Central Bank, known as the troika, have been in Athens since early this week to check on the pace of economic reforms for Greece to meet the targets set out in an international bailout agreement.

The review was paused on Friday, but Evangelos Venizelos denied media reports that was due to disagreement over the country's economic reforms. He told a press conference the break had been scheduled and that the talks will resume in a couple of weeks' time.

A finance ministry official, speaking on condition of anonymity, said the debt inspectors had asked to see the government's draft 2012 budget, but as this would not be completed until next week, talks would resume in about 10 days' time.

Venizelos insisted the government would not impose any additional revenue-generating measures beyond what had already been agreed and voted on in Parliament as part of conditions for Greece's bailout.

The finance minister said the country is in a deeper recession than originally forecast — he estimated the economic contraction will be "very close" to 5 percent this year. That in turn will affect the country's ability to meet its deficit reduction targets.

Greece has been struggling to meet its targets, particularly those for revenue, with tax collection falling short both through difficulties in stamping out tax evasion and because cash-strapped consumers have been spending less.

Greece relies on funds from international bailout loans, with a euro110 billion ($157 billion) package being disbursed in doses since May 2010. A second euro109 billion package was agreed upon on June 21.

The suspension in the debt talks came the morning after the head of a parliamentary panel appointed to assess progress on Greece's reforms resigned following a dispute with the finance ministry. The panel had issued a report which was critical of the government's progress.

The report, published Wednesday, warned Greece would likely miss 2011 budget targets because of months of austerity delays by the government and sluggish tax collection.

Venizelos criticized the document as lacking "validity" and argued that members of the panel — known as the State Budget Office — had yet to acquire the "knowledge, experience and responsibility" required for the job.

The head of the panel, Stella Balfousia, resigned Thursday following Venizelos' statement.