Greece Poised For Further Spending Cuts

Greek Prime Minister Lucas Papademos and leaders of the country’s political parties have agreed to further cut spending by 1.5 percent of GDP, the Greek government’s press service said.

Greek political leaders and representatives of international lenders met on Sunday for five-hour discussions on austerity measures needed to secure a new 130 billion euro ($160 billion) bailout deal, needed to avert default in late March. The consultations will continue on Monday.

“The prime minister and political leaders agreed on major issues, which, among other things, include… measures for 2012 to cut state spending by 1.5 percent of GDP,” the government said in a statement.

The leaders also agreed on other measures, including ensuring the viability of auxiliary pension funds, recapitalization of banks and measures to boost competitiveness by reducing wages and non-wage personnel costs, the statement reads.

The meeting, held in prime minister’s residence, gathered leaders of the three political parties in the country’s coalition government, ministers of finance and labor, and Greece’s three largest rescue lenders – the European Union, the European Central Bank and the International Monetary Fund (IMF).

Conservative leader Antonis Samaras said after the meeting that some of the measures, proposed by the lenders, will only deepen recession in the country. Samaras, who heads Greece’s second largest political party New Democracy, promised to oppose their implementation “by all means.”

“They [the international lenders] want us to plunge into deeper recession, which the country will be unable to withstand,” he said.