Greece's lenders arrive for crucial audit

Chief auditors of international lenders are to arrive in debt-wracked Greece on Friday on a crucial mission which will decide if Athens gets extra time to implement tough austerity in exchange for desperately needed loans. The troika of creditors -- International Monetary Fund, European Union and European Central Bank -- have been demanding that Athens makes up for lost time following delays brought on by back-to-back elections that caused a two-month political deadlock. But Greece has been pleading for some "breathing space" to carry out billions in spending cuts required in exchange for rescue loans. Demonstrators are due to add further pressure on the government on Saturday, with the country's two main unions calling a protest in Greece's second biggest city Thessaloniki against further cuts as the country roils in its fifth year of recession. As yet, the coalition government has not finalised a new austerity programme to implement the cuts necessary to receive the next instalment of its EU-IMF rescue loans. Auditors, whose crucial report is expected in October, are due to meet Finance Minister Yannis Stournaras on Sunday, while no date has been given on their meeting with Prime Minister Antonis Samaras. Samaras was also due to hold talks with EU President Herman Van Rompuy on Friday afternoon. A favourable assessment from the auditors is necessary for the release of a 31.5 billion euro ($39.9 billion) loan installment, which Greece desperately needs as part of a promised 130-billion-euro bailout from the EU and the IMF. French President Francois Hollande and German Chancellor Angela Merkel have both said that the results of the troika assessment would determine their decision on whether to grant Greece extra time. If approved, most of the next tranche of rescue loans will be spent on recapitalising Greek banks which took a heavy blow in a Greek sovereign debt rollover earlier this year. Auditors will also look at the new round of cuts amounting to around 11.6 billion euros. The measures reportedly include a 3.5-billion-euro slash to pensions, health cuts worth 1.47 billion euros and a 517-million-euro reduction to defence. Key state staff paid under so-called 'special salary schemes' -- a group that includes police, firemen, clerics, diplomats, judges and the military -- are also facing an average pay cut of 12 percent, according to reports. Samaras has promised that this will be the last round of cuts but Greeks on all sides are expressing outrage at any further austerity. Local press revealed discord among leaders of the coalition, reporting that the two junior partners were seeking a meeting with Samaras ahead of the troika's session with the finance minister. "It is certain that the measures being prepared will test the social cohesion and stability of the coalition government's cohesion, but they are absolutely necessary in order to obtain financing for Greece from international lenders," said Platon Monokroussos, chief economist of Eurobank said. Hospital doctors and judges took to the streets this week, and security forces also demonstrated on Thursday evening against reported salary cuts. Unions are planning a major march in Thessaloniki on Saturday where Samaras is due to open an annual fair before returning to Athens.