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Greece, lenders start talks on reform compliance

[ATHENS] Greece and its international lenders started talks on Wednesday to assess the country's compliance with terms of an 86-billion-euro (US$136-billion) bailout, as dissent stirred over tax hikes and pension reforms.

Team leaders from three European institutions and the International Monetary Fund are reviewing reforms Athens adopted on Oct 16, and future 'milestones' Greece must introduce soon to be eligible for a payment of 3 billion euros.

The amount is part of an initial loan tranche of 23 billion euros, which includes 10 billion already disbursed to Greece and 10 billion set aside to cover bank recapitalisation costs.

Fiscal and pension reforms and recapitalisation of Greece's banks were on the agenda for the talks, a Greek government official said, as delegations met at a central Athens hotel.

The left-wing government has passed legislation raising the retirement age, increasing healthcare contributions, scrapping most early retirement benefits, and clamping down on tax evasion.

The next phase of its reforms include taxing farmers, raising tax for private education and merging pension funds, which is likely to mean further cutbacks. Civil servants and private sector workers have called a nationwide strike for Nov 12 to protest against the measures.

Labour Minister George Katrougalos said pension reform meant a streamlined and simplified system. "A basic element will be a national pension for all, funded through taxation. We estimate the burden for the national pension will be 7 per cent of GDP, now it is 9.5 per cent of GDP,"he told Antenna Television.

Athens wants the review concluded within the next month and to replenish the capital buffers of its banks by the end of the year so it can start debt relief talks.

Greek lenders have been hit by a capital flight of about 40 billion euros from December of last year until capital controls were imposed in June, and a mountain of non-performing loans triggered by years of deep recession and high unemployment.