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* EU says Greece must stick to bailout plan to get aid
* Date of next visit depends on outcome of June 17 election
* New budget cuts will be key test
By Harry Papachristou
ATHENS, May 30 The European Union turned up
pressure on Greece on Wednesday, warning it must step up reforms
to keep getting full bailout aid and that the date of its next
inspection visit to Athens will depend on the outcome of a
general election on June 17.
Greece is anxiously awaiting the visit by the "troika" of
EU, International Monetary Fund and European Central Bank
officials, which will decide on unlocking more bailout funds.
The date of their inspection has been provisionally set for
late June or early July, but the EU executive raised the
prospect of it being delayed further if the election failed to
produce a suitable coalition government.
"The date of the next review mission ... depends on the
political outcome of the repeated elections," the European
Commission said in a report on Wednesday.
"The mission is provisionally scheduled to take place in
late June/ early July 2012, but the date may be revised in the
course of the following weeks."
The European Commission made it clear in the report that the
continuation of an international aid programme was contingent
upon Athens pushing ahead with difficult reforms and on the
formation of a government ready to honour the country's
"Implementation risks will remain very high," the report
said. "Comprehensive international financial assistance can
continue to be provided only if policy implementation improves."
The repeat election was called earlier this month after a
May poll resulted in political deadlock between parties that
support and oppose the 130-billion-euro rescue package Greece
obtained in exchange for enacting tough austerity measures.
Concerns that the anti-bailout leftist SYRIZA party could
win the election - it is currently running a close second in the
polls behind the pro-bailout conservative New Democracy party -
have sent shockwaves throughout Europe, raising fears that
Greece may be obliged to leave the euro.
Without new bailout funds, Greece will run out of money by
the end of June. The EU's EFSF rescue fund must still decide on
the release of about 4 billion euros left over from an aid
tranche agreed in March.
The Commission seemed to brush aside in the report calls by
Greek pro-bailout leaders to relax the country's fiscal targets
under the programme.
"The success of the programme ... hinges on the full and
timely implementation of fiscal consolidation and
growth-enhancing structural reforms," it said, adding that
Greece must comply with a bailout condition to identify and
implement about 11.7 billion euros in savings for 2013 and 2014.
"The determination of the Greek authorities to stick to the
agreed policies will be tested in the coming months, when
deficit-reducing measures to close the large (fiscal) gap for
2013-2014 need to be identified," the report said.
The leaders of Greece's two major pro-bailout parties, the
conservative New Democracy and the Socialist PASOK, both said
this weekend that the spending cuts should be spread out over
four or five years to soften their impact on the economy.
The bailout deal allows for a possible relaxation of the
bailout targets if the recession worsens. Greece has been going
through its fifth consecutive year of recession. GDP slumped by
6.2 percent in the first quarter, versus a troika estimate for a
4.7 percent contraction for the full year.
Greece's deficit is planned to shrink to 7.3 percent of GDP
this year from 9.3 percent in 2011.
(Editing by Catherine Evans)