Greece says debt talks to avert default 'productive'

Greece says it has held "productive and substantive" talks with its debt inspectors aimed at deciding if Athens should get more bailout money.

Discussions between Greece, the International Monetary Fund and European authorities will resume on Tuesday.

No further details of Monday's three-hours talks were made public.

Global markets tumbled on Monday amid fears Greece will default and a call from the IMF for deeper spending cuts.

Monday evening's teleconference was between the Deputy Prime Minister and Minister of Finance, Mr Evangelos Venizelos, and senior representatives of the Troika - the name for the European Central Bank, European Commission, and IMF.

There is concern among Greece's international creditors that it is not doing enough to get its spending under control and to warrant the next 8bn-euro (£7bn; $11bn) instalment of its rescue loan.

On Monday the IMF told Greece it needs better tax collection and deeper spending cuts, not higher taxes, to avert a debt default.

Fears that Greece will default and send shockwaves through the global economy saw stock markets tumble, and the euro fall and oil prices fall.

The FTSE 100 index closed down 2% and France's Cac fell 3%. On Wall Street the Dow Jones recovered from earlier heavy losses to end 0.9% lower.

Athens needs the next tranche of bailout aid by next month to avoid defaulting on its debt.

The loan comes with the condition that Greece dramatically reduce its deficit, something that it plans to do by cutting the size of the state sector through redundancies, pay cuts and privatisations.

The IMF representative for Greece, Bob Traa, who is in Athens, said this was of crucial importance: "The public sector is very large. Another central element in our view must be to reduce public sector spending.

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There are countless stories of young people in their 30s moving back in with their parents. Some 15% of Athens' shops have closed. When fruit and vegetable markets close, there are reports of people scavenging for the damaged fruit”

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"This will inevitably require the closure of inefficient state entities as well as reductions in the excessively large public sector workforce and generous public sector wages, which in some cases are above those of the equivalent private sector workers."

source:  http://www.bbc.co.uk/