Greece to present new budget ahead of debt talks - The Best from Greece

ATHENS: Greece was to present a new austerity budget for approval in parliament on Friday as its interim government prepared for talks with international creditors on a bankruptcy-saving debt deal.

Finance Minister Evangelos Venizelos will table the blueprint at midday (1000 GMT) as auditors from the European Union, the European Central Bank and the International Monetary Fund arrive in the Greek capital for negotiations on a rescue agreement brokered by the eurozone last month.

The rescue plan, the second in two years, gives Athens 100 billion euros in loans and 30 billion to recapitalise its banks.

But its ratification has been held up, along with a vital slice of loans from an earlier EU-IMF bailout, by reform delays in Athens and a political crisis that saw the formation of a temporary unity government under former European Central Bank deputy chief Lucas Papademos last week.

The 2012 budget draft presented last month foresees a fourth straight year of recession with the economy contracting by 2.5 per cent.

Venizelos is also working on overhauling the tax system which will drastically reduce tax breaks and sharpen income thresholds in a desperate bid to fill state coffers.

Budget revenue for the first 10 months of the year was down 4.1 per cent compared to last year, the finance ministry said this week.

The government lowered its public deficit forecast to about 9.0 per cent of GDP this year, above the 7.4 per cent agreed with the IMF and EU and on which critical bailout loans are tied.

Greece needs an eight-billion-euro (US$10.8 billion) installment from last year's 110-billion-euro rescue deal before it runs out of money on December 15.

The IMF indicated on Thursday that it was waiting to see broad political support from the Greek authorities for austerity measures before it will provide its share of the loan.

Brussels is also demanding written pledges to deeply unpopular austerity measures and structural reforms, a commitment which two of the three political leaders in Greece's ruling coalition have refused to make.

Conservative leader Antonis Samaras and the head of the far-right party LAOS, George Karatzaferis, say their backing is implied in their support of Papademos' unity government.

Papademos will seek to break the political deadlock in talks on Monday in Brussels with EU President Herman Van Rompuy and European Commission Chairman Jose Manuel Barroso.

The Greek PM will then travel to Luxembourg on Tuesday for a meeting with his counterpart Jean-Claude Juncker, the eurozone's head policymaker.

- AFP/ck