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Greece unveils modest cuts in government spending

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Facing tough negotiations with the European Union over a crucial debt financing deal, Greece's hard-left government revealed Thursday it will seek millions in savings through spending cuts to ministerial budgets.

[ATHENS] April 16, 2015 (AFP) - Facing tough negotiations with the European Union over a crucial debt financing deal, Greece's hard-left government revealed Thursday it will seek millions in savings through spending cuts to ministerial budgets.

Though modest compared to Greece's huge debt and financing costs, the mix of cuts and new revenues aim to achieve around 300 million euros (S$436 million) in total economies, said deputy Finance Minister Dimitris Mardas.

In addition to rolling back 177 million euros in spending by ministries and state administrations in areas like communications, Mardas said new revenues raised should raise the total amount of savings realised to nearly 300 million euros.

"For example, we are going to start renting out public buildings that are not in use," Mr Mardas said of the efforts to find new sources of income.

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As part of that the government said it would crack down on activities that deprive the state of income, including black market fuel sales, abuse of the health care system and people stashing capital in foreign accounts.

"The idea will be to make people resorting to fraud pay as quickly as possible by offering them an amnesty" if they come clean, Mr Mardas said. He added that while recuperation of those lost funds would be considerable, it was "difficult to evaluate" their total worth with much precision.

The announcement comes as the Syriza-led government struggles to come to an agreement with eurozone partners to free up the last 7.2-billion euro bailout funding tranche for Greece by the initial April 24 deadline.

EU creditors insist Greece must push ahead with tough reforms and stick to austerity policies to receive the funding.

Athens, by contrast, insists it must be able to finance public programs to remove the pain of relentless belt-tightening, and invest in stimulus schemes capable of sparking economic growth.

Progress towards a Greek-EU agreement is thus far proving elusive, as Athens runs out of money to pay its creditors, raising the risk of a default and a potentially chaotic exit from the single currency bloc.

"We continue to work with other institutions and the Greek authorities. Talks are ongoing. However at this stage, we are not satisfied with the level of progress," European Commission spokesman Margaritis Schinas said at a press conference in Brussels Thursday.

Another EU source painted efforts to come to an agreement in even starker detail, saying "nothing has happened over the past few days. Absolutely nothing."

Despite the rising tensions, Mr Mardas sought to sound a positive note as his government unveiled the savings measures, and announced Greece's inital budgetary results.

According to initial first quarter statistics, Greece's primary surplus - state spending and revenues prior to debt payments - rose to 1.73 billion euros, versus 1.54 billion euros over the same period in 2014.

With liquidity ever tighter, Athens also cut spending 1.5 billion more than initially planned.

"In February we were already being told that we couldn't pay pensions and civil servant salaries, but in the end we succeeded," Mr Mardas said.

He also promised Greece would make good on its other commitments to creditors, starting with an 80-million-euro repayment of International Monetary Fund money on Friday.

AFP

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