Greece needs 2.5 billion extra spending cuts over two years: paper [Reuters]

Greece will likely need to cut an additional 2.5 billion euros in spending over the next two years to meet demands made by its international lenders in return for financial aid, Germany’s Der Spiegel magazine reported on Saturday.

Citing an interim report by the troika of European Commission, European Central Bank and International Monetary Fund, Der Spiegel said Greece would likely need 14 billion euros over the next two years to get its deficit below 3 percent by the end of 2014, up from a previously expected 11.5 billion.

The country’s budget deficit stood at 9.3 percent in 2011.

The increased financing gap was due to setbacks to privatization plans and as the economy, in its fifth year of recession, was faring worse than expected, the magazine said.

International creditors, who have bailed out Greece twice, have set those targets in return for financial aid. A positive verdict from the troika is key for lenders to decide whether they will keep funds flowing to the austerity-bound country.

The troika representatives wrote the report after their last trip to Athens and would determine the exact amount needed when they next visit Greece in early September, the magazine reported.

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