CORRECTED – EU, IMF to press Greece on fiscal plans, privatisations

(Corrects millions to billions in second last paragraph)

* EU, IMF inspectors start 3-day visit

* Will discuss 2012-2014 budget plan, privatisations

* Eye revenue increase, spending cuts

By Ingrid Melander

ATHENS, April 5 (Reuters) – An inspection team for Greece’s
international lenders will this week press the country to
deliver on promises to make extra budget savings over the next
three years and speed up privatisations.

The EU and International Monetary Fund inspectors starting a
three-day visit on Tuesday will scrutinize a draft 2012-2014
budget plan, a key condition of Greece’s 110 billion euro ($156
billion) bailout.

Against a backdrop of concerns that fiscal shortfalls and
persistent economic weakness might eventually force the country
into a debt restructuring, they will also review how plans to
target proceeds of 50 billion euros from privatisations are

Greek officials have said that two thirds of the measures
being considered for the 2012-2014 budget plan would focus on
spending cuts and one third on revenue increases.

The country must overall achieve savings of about 8 percent
of GDP in 2012-2014 to meet targets set by the lenders when they
rescued Greece from bankruptcy last year.

“The conditions are tough, the environment is adverse and
uncertainties are big,” central bank chief George Provopoulos
told To Vima newspaper over the weekend.

“But we have a chance to improve the situation as long as we
are fast, daring and imaginative in implementing a coherent plan
for the use of state property and create attractive
opportunities for foreign investors.”

Among steps being considered to achieve the necessary
savings are an end to some tax exemptions for high income
earners, including on interest paid on a first mortgage.

“We will discuss the medium-term plan on the expenditure and
revenue side, restructuring in state-owned enterprises and
privatisations,” said an official close to the troika of
European Commission, IMF and European Central Bank officials.

The official said talks were likely to focus on the
principles guiding the privatisation exercise rather than
discuss figures. “Greece just appointed advisers, we are still
in the exploratory phase,” the official told Reuters.


At the end of March, Greece picked its first advisers on
privatisation projects since it agreed in February to target
proceeds of 50 billion euros. [ID:nLDE72M14S]

Analysts said Greece still had much work to do to convince
investors it will meet its targets and manage to go back to bond
markets this year or next, especially after recent rating
downgrades deeper into junk territory.

“It’s going to be really hard for Greece to continue to meet
its overall budget deficit targets while being in recession,”
said Ben May, at Capital Economics. “It may well be its hopes to
clamp down on tax evasion prove optimistic.”

IMF head Dominique Strauss-Kahn on Monday dismissed a German
press report saying the fund was quietly pushing Athens to
restructure its debt. “We are supporting the Greek government in
its position that it doesn’t want a restructuring,” he told
students in Washington. [ID:nN04178952]

The technical visit, in which IMF mission chief Poul Thomsen
is expected to take part on Wednesday, is not one of the regular
quarterly review missions and will not determine whether Greece
will get the next tranche of aid. This will be done during the
next regular visit in May, officials said.

Greece has so far received 53 billion euros from the EU and
the IMF, nearly half of what it will receive overall.

EU and IMF inspectors said during their last visit in
February that Athens was broadly on track but warned its fiscal
programme could be derailed unless it accelerated reforms and
scaled up privatisations. [ID:nLDE71A1K6]

(Reporting by Ingrid Melander; Editing by John Stonestreet)

CORRECTED – EU, IMF to press Greece on fiscal plans, privatisations