Reuters: US Dollar Report: Greek austerity plan needs softening - KEPE think tank

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Greek austerity plan needs softening - KEPE think tank Sep 4th 2012, 16:49 ATHENS, Sept 4 | Tue Sep 4, 2012 12:49pm EDT ATHENS, Sept 4 (Reuters) - Greece's debt load is unsustainable and cannot be cut to the targeted 120 percent of national output by 2020 without drastic changes to the country's austerity programme, Greek think tank KEPE said on Tuesday. Greece's continued funding under a 130 billion euro bailout by its euro zone partners and the International Monetary fund (IMF) hinges on its ability to meet this target, which will enable it to return to market funding. Athens is keen to secure more time to apply the prescribed austerity to return to fiscal health but international lenders insist it must first deliver on commitments and bring the bailout plan back on track. "To achieve the target, actions must be taken such as an extension of the programme, lowering the interest on debt and speeding up privatisations," the state-funded think tank said in a report. The costs of recapitalising the country's viable banks, estimated at 50 billion euros ($62.92 billion), would have to be funded directly from Europe's rescue mechanism ESM and not count as public debt, KEPE said. Greece must deliver this month almost 12 billion euros of cuts for 2013-2014 in order to continue to be funded or it will go bust. Inspectors from the so-called troika of IMF, EU and ECB lenders are due in Athens later this week.

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