Greece to Make Cuts Despite Opposition

Greece will stand by extra reform efforts thrashed out with creditors, despite last-minute opposition within the government, a finance ministry source said on Thursday.

Against a background of uncertainty over a two-year extension to meet its fiscal targets, the source said Greece's representative to a preparatory Eurogroup meeting later in the day had been instructed to say that the government "is proceeding as scheduled."

The government has been trying for months to finalize a 13.5-billion-euro ($17.5-billion) austerity package in negotiations with a mission from the EU, the IMF and the European Central Bank, the so-called 'troika' of creditors.

Though the bulk of the package has been agreed, there is opposition within the three-party government coalition to additional labor reforms demanded by the troika.

"The main part of the package is closed, details on labor issues remain," the finance ministry source told Agence France Presse on condition of anonymity.

The government's junior partner, the moderate Democratic Left party, continues to oppose cuts to severance pay and measures to facilitate layoffs at a time of rampant unemployment, arguing that the benefits to the state budget will be minimal.

The new round of spending cuts and reforms by Greece is required to unlock a 31.2 billion euro ($40 billion) installment from its rescue loans.

Finance Minister Yannis Stournaras told parliament on Wednesday that the troika had granted a long-sought extension for Greece to meet its fiscal goals.

But officials at both the European Union and the International Monetary Fund were quick to make it clear that the troika had not yet reached any agreement with Athens.

"Substantial progress has been made in talks with Greece but a few outstanding issues remain before a staff-level agreement can be reached," a spokesman for European economic affairs commissioner Olli Rehn said in a tweet.

The International Monetary Fund issued a similar message soon after.

"There has been progress in recent days, but some outstanding issues remain to be agreed upon to reach full staff-level agreement," a spokesman said.

A two-year delay is expected require an additional 15 to 18 billion euros, according to Greek media, which Greece's European partners will need to find as the IMF has refused to increase its commitment.