Greece confident aid tranche to be paid, denies talks deadlocked

By Lefteris Papadimas

ATHENS | Wed Mar 6, 2013 1:30pm EST

(Reuters) - Greece is confident of getting an aid tranche due this month, its finance minister said on Wednesday, dismissing speculation that talks with foreign lenders on cutting its bloated public sector were deadlocked.

The European Union and International Monetary Fund - whose officials began their latest inspection visit to Athens on Sunday - agreed in December to give 49.1 billion euros in aid to Greece, easing fears of a Greek bankruptcy and euro zone exit.

Most of that was paid out immediately, but Athens is waiting on 2.8 billion euros of aid for March. The country - which has long struggled to implement reforms it has signed up to - must reduce the high cost of medicines and complete a plan to cut the size of its civil service to unlock that tranche.

"I believe we will get it," Finance Minister Yannis Stournaras told reporters after briefing the prime minister on talks between himself, the labor and development ministers and the troika of EU, IMF and European Central Bank inspectors.

Greece's bailout requires it to transfer 25,000 employees by the end of the year to a so-called mobility scheme, where they will earn reduced pay for a year and may be fired if alternative jobs cannot be found for them.

To secure the March tranche, Athens needs to present a detailed staffing plan spelling out which ministries the workers will come from and how many of those will be laid off.

But public sector layoffs are a deeply sensitive issue in Greece - where the constitution bars them from being laid off - and officials played down speculation in Greek media that the two sides were at loggerheads because the troika had demanded imminent job cuts.

Asked if the issue had led to a stalemate in talks with the troika, Stournaras said: "No. There is no deadlock."

A senior government official, who declined to be named, told Reuters Greece would meet the year-end target to put 25,000 in the mobility scheme and it would include those suspected of violating the law, those close to retirement and those who could be transferred to other public sector jobs.

"The government is now concluding the staffing plan and will meet its targets within the deadline," the official said.

"The meetings between the troika and the Greek government are conducted in a very good climate."

Athens is keen to avoid public sector layoffs as it struggles through its sixth year of recession. Unemployment, now at 27 percent, has tripled since the debt crisis erupted in 2009 and public anger has risen after three years of austerity measures which include steep cuts to wages and pensions.

As part of its bailout obligations, Greece has agreed to reduce its public sector workforce by 150,000 by 2015 to cut its wage bill although this will take place mainly through hiring one new person for every 10 who retire.

(Writing by Karolina Tagaris, editing by Deepa Babington)