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Greece denies EU, IMF rift

Greece denied reports of a rift with EU-IMF auditors today who cut short their visit after noting Athens had failed to meet targets to unlock more rescue funding.

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Source: AFP


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Greece denied Friday reports of a rift with EU-IMF auditors who cut short a visit to the debt-plagued eurozone state after noting Athens had failed to meet targets to unlock more rescue funding.

"There is nothing of the sort," a finance ministry source told AFP, insisting that a scheduled instalment from an 110-billion-euro ($158-billion) EU-IMF bailout loan secured last year "is not at risk".

Greek media including the semi-state Athens News Agency (ANA) reported a deadlock in talks with European Union, International Monetary Fund and European Central Bank representatives who were said to have demanded additional measures worth 1.7 billion euros to make up a shortfall.

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"There is a good climate of cooperation," the ministry source said.

"They are pushing for faster changes, and they are right."

"The auditing team will return in 10 days, when the 2012 budget draft is ready, to close the negotiation," he added.

The senior officials from the three organisations arrived on Monday to head the audit which usually takes around two weeks.

The talk of a rift between Greece and its creditors follows a furore over a report by a Greek budgetary watchdog that warned the country's massive debt was "out of control".

On Thursday, the head of the newly-formed State Budget Execution Monitoring Office submitted her resignation to parliament after strong criticism from the finance minister, who accused the agency of irresponsibility for releasing the report.

Finance Minister Evangelos Venizelos had complained the watchdog lacked "knowledge, experience and responsibility" about how macroeconomic and fiscal reports are compiled, checked and published.

The watchdog's report warned that the dynamic of Greece's enormous debt was "out of control" as the country was falling even further into recession.

It said that slippage on meeting deficit targets, exacerbated by the recession, threatened to cancel out the benefits of a new EU-IMF debt bailout.

"A significant debt increase, a high primary deficit and the deep recession have boosted to the extreme the debt dynamic, which is now out of control," the new budget office, staffed by independent analysts, said.

"These developments seem to offset to a great extent the positive impact" of the latest 159 billion euros ($229 billion) bailout agreed last month, it added.

Hit by stinging austerity measures, the Greek economy is shrinking at an alarming rate, with Venizelos last week admitting it will likely contract by more than 4.5 percent in 2011, worse than the previous 3.5 percent forecast.

The slowing economy has as complicated the government's efforts to squeeze down the public deficit. At the endo of July the deficit had hit 15.5 billion euros against the annual target of 16.68 billion.

Greece's debt, in the meantime, has ballooned to over 350 billion euros.


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