Greece Seeks To Revise Bailout Terms As Samaras Prepares To Unveil New Cabinet

As Greece’s new Prime Minister Antonis Samaras prepares to unveil his cabinet, reports are emerging that the Athens government may seek a two-year extension to fulfill the fiscal targets as mandated by the terms of the huge bailout agreements in entered into with the European Union and International Monetary Fund.

At present, lenders from EU and IMF have demanded that Greece reduce its budget deficit to 2.1 percent of GDP from the 9.3 percent figure recorded last year by 2014 -- the Athens government will ask for an extension on that target by another two years. (Such an extension, Greek officials told Reuters, would likely require the infusion of another €16 billion to €20 billion ($20 billion to $25 billion) in foreign funds.

The coalition government will also ask for an extension on unemployment benefits -- to two years from one year -- in a country where more than 20 percent are jobless and also ask for a limit on the layoffs of public sector workers.

Greek officials will present the proposed revisions at a euro zone finance ministers' meeting in Luxembourg on Thursday.

Samaras, whose New Democracy, or ND, party, narrowly won the do-over election last weekend, entered into a coalition pact with leaders of the Socialist Pasok party and the smaller Democratic Left, or DL.

While Samaras and Pasok chief Evangelos Venizelos generally favor the bailout and the related austerity program imposed upon the Greek public, the fragile coalition is under extreme pressure to revise terms of the bailout in order to relieve some of the burdens incurred by the beleaguered electorate.

The proposed revised agreement may be rejected by euro zone leaders -- particularly Germany -- who have become fed up with Greece’s endless political squabbles and refusal to abide by fiscal austerity.

The €130 billion bailout lenders agreed to provide Greece in March is essentially keeping the country from sinking into bankruptcy.

Meanwhile, Samaras is expected to reveal the composition of his cabinet -- observers will look for the presence of any major leftist lawmakers. In the event the new cabinet has no left-wing ministers, it would suggest that they want no part of Samaras’ fiscal program.

We expect the cabinet to be announced after the meeting, a New Democracy source told Agence France Presse.

But BBC reported that Pasok and DL may not allow any of its MPs to join the cabinet.

“One of the sticking points in forming the government has been the composition of the cabinet, Mark Lowen, a BBC correspondent in Athens, commented. Some former Pasok ministers wanted key posts, but the party leader [Venizelos] decided that none of his MPs should take cabinet positions.”

“The third coalition member, Democratic Left, also kept its MPs out, Lowen added. Why? Clearly to avoid association with unpopular austerity measures to come. It does not bode well for the future strength and solidarity of the coalition. But government sources say all three parties have signed an agreement to support the coalition fully, even without representation in cabinet.”

Moreover, the radical left-wing Syriza party, which finished a close second in the election and wants no part of the coalition, will no doubt exert immense pressure on Samaras to dramatically revise bailout terms to make them more favorable to Greece.

Interestingly, the new cabinet is also expected to be subject to its own kind of austerity -- Greek paper Kathimerini reported that the new government will comprise only 28 ministers, significantly lower than the 49 members of the prior administration.

But at least one prominent name has already been unveiled -- the chairman of Greece’s National Bank, Vassilis Rapanos, will become the country’s new finance minister.