Greece tackles reform drive

After weathering a late-night confidence vote, Greece's government on Wednesday was to finalise a multi-billion-euro reform drive demanded by its international creditors to unlock the prospect of fresh aid. Prime Minister George Papandreou was to chair an inner cabinet meeting on a new law to implement the austerity drive, worth over 28 billion euros ($40 billion) by 2015, his office said. The reforms are demanded by the European Union, the International Monetary Fund and the European Central Bank, which last year rescued Greece from imminent bankruptcy with a 110-billion-euro ($157-billion) loan. The money has so far enabled Athens to keep up with other loan obligations and pay wages and pensions, but the economic recovery plan that accompanied it has failed to break the country's financial isolation. Struck with repeated downgrades of its sovereign debt status by rating agencies, Greece has been unable to raise new long-term loans and its available funds will run out next month if it cannot access a scheduled 12-billion-euro instalment from the bailout loan . A finance ministry source on Tuesday told AFP that Greece's treasury only had adequate funds to July 18 to meet payment obligations. "After mid-July we will be unable to pay wages and pensions," government spokesman Elias Mossialos told Skai television on Tuesday. Athens needs nearly seven billion euros next month just to stay abreast of its loan repayments, a study by Greece's number two lender EFG Eurobank said this week. To earn a new bailout, it effectively has two weeks to convince its European peers that it will carry out long-delayed reforms and privatisations. Europe gave Greece an ultimatum to deliver on long-delayed reforms after the International Monetary Fund recently warned that it would hold back its share of loan payments in the absence of a clear roadmap on the Greek debt crisis. "We have to pass two laws by June 30 so that procedures at the Eurogroup will move on July 3, enabling the IMF to decide to release the fifth loan instalment on July 8," Finance Minister Evangelos Venizelos told parliament on Tuesday. Venizelos, newly promoted to the post from the defence ministry on Friday, said the government would pursue "broader and faster" state operational cost cutbacks than those envisaged in talks with its creditors. He also pledged a tax system overhaul and a spate of measures to boost development, making use of European regional cohesion funds. This is a prospect already discussed in Brussels as a cost-effective way to help Greece without requesting new, unpopular loans from European taxpayers. European Commission president Jose Manuel Barroso on Tuesday suggested the EU agree "emergency" measures to pump up the Greek economy by swiftly unlocking up to a billion euros from the bloc's budget. He said "one billion euros are available" of fresh money that Greece can access under European Union funds budgeted to help bring poorer regions in line with the rest of the 27-nation union -- so-called regional and cohesion funds. The funds, often used for infrastructure and economic projects, require a nation to provide a percentage of the cost of each project. But cash-strapped Greece currently is unable to put forward its share in any project, so cannot access funding. An EU source said Brussels could advance the monies with Greece paying back its share at a later date. Most analysts argue that Greece will be ultimately unable to avoid defaulting on a debt currently exceeding 350 billion euros without a decision to lighten the load, with or without the agreement of its creditors. European leaders cannot agree on whether to force private creditors such as banks to accept a compromise solution, such as granting Greece more time to repay its dues, as rating agencies warn that this too could technically constitute a default.