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Greece faces longer recession - study

September 4 2012 at 04:47pm

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Athens - Greece faces a longer recession if the country is forced by EU peers to apply cuts worth 11.6 billion euros ($14.4 billion) over two years instead of four, a state-sponsored study said on Tuesday.

“In the case where the 11.6 billion euros (in) agreed government spending cuts are implemented (over) a two-year period, we adopt the hypothesis that the 2012 recession will continue in 2013 and 2014,” the Center of Planning and Economic Research (KEPE) said in a bulletin.

Greece has been seeking additional time to make the cuts, agreed to in return for loans from the EU, the IMF and the European Central Bank.

But the international creditors have been demanding that Athens catch up with time lost earlier this year when back-to-back elections were held, placing the reform drive on standstill.

The cuts package was originally to have been adopted in June, and a privatisation push calculated to earn 19 billion euros by 2015 is also behind schedule.

German Finance Minister Wolfgang Schaeuble insisted on Tuesday that Greece must stick to its reform promises to unlock bailout cash the debt-wracked country needs to stave off default and stay in the eurozone.

A positive report from the so-called troika of creditors is essential for Greece to get the next 31.5-billion-euro instalment of funds to keep it afloat. - Sapa-AFP


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