Auditors arrive in Greece as minister sees worse recession

IMF and EU auditors arrived in Athens Tuesday to review Greece's finances and progress on bailout conditions, as the new government warned a bad recession had turned worse. The audit by inspectors from the EU, European Central Bank and International Monetary Fund to formally begin on Thursday is expected to take weeks and comes as Greece's new conservative government takes the full reins of power after winning elections on June 17. Since the election, the coalition led by Prime Minister Antonis Samaras has has been stuck in limbo, hit by health problems and surprise resignations. The new finance minister Yannis Stournaras is expected to be sworn in on Thursday. But the man already installed as deputy finance minister warned that the already battered Greek economy would contract by 6.7 percent in 2012 compared to an earlier forecast of 4.5 percent. Greece's economy shrank by 6.9 percent in 2011. "The economic situation is critical," Christos Staikouras said citing alarming figures from recently released data by the state-run Centre of Planning and Economic Research (KEPE). The disastrous data will certainly be part of the case put to the EU, IMF and European Central Bank auditors as the so-called troika review ministry books over the next few weeks. The heads of the troika mission arrive on Wednesday. Samaras already asked European Union partners for "necessary modifications" to the conditions of the 130-billion-euro ($164 billion) EU-IMF bailout in a letter sent to Brussels ahead of a summit last week. And before the election in which the conservative New Democracy party narrowly beat leftist Syriza, the prime minister said he would attempt to revisit terms agreed in Greece's second rescue. But in the letter to his EU colleagues, Samaras also stressed the new Greek government "is absolutely determined to fulfil its obligations emanating from the recent bailout agreement." Samaras, who underwent major eye surgery just days after his electoral win, will officially reveal his programme in parliament on Friday, ahead of a vote of confidence in the 300-seat chamber which his coalition can handily win. But on Thursday, before the opening session of parliament, Samaras will meet the "troika" auditors whose conclusions will determine whether Greece's bailout programme will continue and whether rescue funds may be released. "The troika inspection is of utmost importance," said Horst Reichenbach, the head of European Commission Task Force for Greece, a mission devoted to overhauling Greece's public administration that stands apart of troika auditors. Reichenbach, speaking at a conference organised by the The Economist newsweekly, said there were no easy solutions for Greece and he urged the new government to press on with its commitments. He also stressed the importance of the government paying the arrears that have accumulated. In a report published by the ministry of finance on Tuesday, the public sector's overdue debts to the private companies totalled 6.8 billion euros between January and May. Greek privatisation chief Costas Mitropoulos said the country would not even be able to meet the reduced target of 3.2 billion euros in privatisation receipts this year.