ATHENS, Aug 21 (Reuters) - Greece needs to drum up an additional 2 billion euros in savings over the next two years to meet targets under its EU/IMF bailout and offset the impact of lower tax revenues from some of the cuts, a senior finance ministry official said on Tuesday.
Under the terms of its 130-billion euro bailout agreed in March, Athens is required to identify spending cuts worth 5.5 percent of GDP, or about 11.5 billion euros, for the next two years.
But the total size of the austerity package stands at 13.5 billion euros after taking into account the adverse impact the measures will have on the economy and tax receipts, the official said.
“In order to arrive at net spending cuts of 11.5 billion euros, we have to take fiscal measures with a nominal value of 13.5 billion euros,” the official said on condition of anonymity.
Over the past few weeks, ministers in Greece’s fragile three-party coalition have been frantically looking for ways to flesh out the measures. On Friday, they had identified measures worth 10.8 billion euros, mostly cuts in pensions, public sector wages, welfare benefits and hospital costs.
Citing an interim report by EU and IMF inspectors on Greece, German magazine “Der Spiegel” had reported on Saturday that Athens needed to find an extra 2.5 billion euros ($3.12 billion) of spending cuts over the next two years.
The report attributed the shortfall to Greece’s deeper than expected recession and the smaller than expected privatisation revenues it has achieved so far.
Under the terms of its bailout, the second since 2010, Greece must reduce its budget deficit to below 3 percent of GDP by the end of 2014 from 9.3 percent last year.