Greek budget cuts probed again by EU-IMF auditors: ministry

(ATHENS) - Auditors from the European Union and International Monetary Fund began a new probe on Monday into Greek budget cuts to judge whether a new nine-billion-euro loan should be granted in September.

Greece was rescued from imminent default three months ago with huge loans from the EU and IMF, and its banking sector is heavily reliant on special measures by the European Central Bank.

The Greek crisis caused huge strains within the eurozone and European Union which, together with the IMF, now regularly audit the progress the Socialist government is making in imposing radical spending cuts, tax rises and structural reforms to correct public finances.

The experts were to spend the day at the finance ministry for talks with Finance Minister George Papaconstantinou, and the president of the council of experts at the ministry George Zanias, a spokesman told AFP.

They were also to meet the governor of the central bank and the leaders of trades unions and employers.

The representative of the European Commission here, Servaas Deroose, said in press comments on Sunday: "Our main objective is to solve in the short and long term the problem of the public deficit and debt and ensure that public finances are viable."

The audit is part of the agreement in May when the EU and IMF agreed to lend Greece 110 billion euros for three years. This was conditional on action to reduce the public deficit from nearly 14 percent of output in 2009 to less than 3.0 percent in 2014.

The target for this year is a deficit of 8.1 percent of gross domestic product.

A central factor in the crisis which began to break over Greece towards the end of last year was that official statistics had been misrepresented for years. Last week, the statistics agency became independent of the government.

In May, Greece received 20 billion euros (25.8 billion dollars), of which 14.5 billion euros came from the European Union and 5.5 billion euros from the IMF.

It is due to receive two more loans, each of 9.0 billion euros, comprising 6.5 billion euros from the EU and 2.5 billion euros from the IMF, in September and December.

Papconstantinou has said several times that he is confident that the second instalment will be paid in September.

Reports here say that the experts will look particularly closely at a delay in revenues in the first half of the year. These have risen by 7.2 percent instead of by 13.7 percent as had been expected.

They will also look at debts owed by the hospital system, by local authorities and by companies in the public sector, particularly urban transportation and railway systems.