26 Aug 2012

Greece urged to prove it can pass reforms

6:12 am on 26 August 2012

President Francois Hollande of France has urged Greece to prove it can pass reforms demanded by international creditors.

After talks with Greek Prime Minister Antonis Samaras on Saturday, Mr Hollande said no further decision could be taken until European ministers consider a report on Greece's finances, due in September.

Greece has been appealing for more time to introduce the reforms, but donors insist that major spending cuts have to be made to secure the next tranche of the bailout, 33.5 billion euros.

Mr Samaras is seeking an extension of up to two years for the necessary reforms, in order to provide Greece with the growth needed to improve its public finances.

In talks with German Chancellor Angela Merkel on Friday, he was told that the decision would depend on a report from the International Monetary Fund, the European Central Bank and the European Commission.

Mr Hollande also said Europe needed to consider the report before it could make any further decisions on Greece.

He said decisions on whether to grant Greece more time should be taken when European finance ministers meet in early October.

''We've been facing this question for two and a half years, there's no time to lose,'' he said.

Athens is trying to finalise a package of 11.5 billion euros ($US14.4 billion) of spending cuts over the next two years.

It is also being asked to carry out economic and structural reforms, including changes to the labour market and a renewed privatisation drive.

The measures are needed to qualify for the next instalment of its second bailout, worth 130 billion euros.

Greece needs the funds to make repayments on its debt. A default could result in the country leaving the euro.