BERLIN — Greece's international creditors spelled out the detailed spending cuts and reforms that Athens has to introduce before it can receive vital bailout cash, according to a draft document obtained by The Associated Press on Tuesday.
The measures — which range from getting tougher with tax evaders to cutting prescription drug budgets — are part of the large austerity package that lawmakers in Athens passed over the weekend. The country's international creditors — the other 16 countries that use the euro and the International Monetary Fund — are now insisting that they have to be implemented before Greece can get a second, €130 billion ($172 billion) bailout. Without that money, Greece will be forced into a disorderly default on its debts by the end of March that could seriously disrupt Europe's bank finances and the world's financial markets.
"I can understand the pain and turmoil in Greece," said Olli Rehn, the European Union's economic and monetary affairs commissioner. "But at the same time this is the framework which has been decided" by the euro member states and the International Monetary Fund.
"It is really in the interest of everyone in Greece and Europe now to make this work and avoid a disorderly default of Greece, which would have devastating consequences," Rehn said.
Debt-stricken Greece faces a €14.5 billion ($19 billion) bond redemption deadline which it cannot afford to pay on March 20 and will therefore need the bailout in place by then.
The detail and number of the demands is evidence of the growing mistrust between Greece and its creditors. The country has been criticized in the past for not putting into practice reforms that were either promised and not delivered or enacted into law but never enforced.
This time, the international creditors want to see tangible results and have insisted on a total of €2.6 billion ($3.45 billion) in cuts that need to be implemented before they transfer any more money.
Included in cuts are a €1 billion ($1.32 billion) cut in what the country spends on medicine in its state health service, and a €300 million ($398 million) reduction in the defense budget. Reducing central government and election-related spending will also reduce spending by €270 million ($358 million), and subsidies of €300 million ($398 million) to pension funds will also be slashed.
The document says the Greek government must also slash its public investment budget by €400 million ($530 million) "through cuts in subsidies to private investments and nationally financed investment projects."
On top of this, Greece has to find further savings worth €325 million ($431 million) to meet its debt reduction targets.
Greece's cabinet was set to discuss the new cuts Tuesday and the EU's Rehn has demanded that the details of the €325 million in savings be ready for eurozone finance ministers to assess when they meet in Brussels on Wednesday.
Germany, Europe's biggest economy, has been taking a tough line on Greek compliance. The country's Economy Minister, Philip Roesler, called on Athens to deliver on its pledges, saying Sunday's vote in Parliament was "important but even more important is the concrete implementation."
"Decisions in Parliament are not enough, they then also have to be implemented," he said.
The detailed 49-page document, obtained by the AP from an official in Berlin who received an advance copy, is the Memorandum of Understanding — the legal basis for all international bailouts.
The memorandum also lists many measures that Greece has to implement after the disbursement of its next batch of bailout loans, including structural reforms meant to boost the country's competitiveness.
The finance ministers of Greece and the rest of the 17-country eurozone are expected to sign the Memorandum of Understanding at their meeting Wednesday.
The creditors say that Greece must step up its privatization efforts, although the country is given more time to sell off state assets. According to the document, Athens has to offer for sale its remaining stakes in state-owned companies excluding "only cases of critical network infrastructure."
Greece has promised that it will sell €50 billion ($66.3 billion) worth of assets but progress has been slow.
On top of that, Greece has to push through a 25 percent increase in public transport fares and cut its government work force by 15,000 jobs by year's end.
The document also spells out a wide range of data that Greece must provide to its assessors on a regular basis, another sign of the country's loss of control.
Greece has been shut out of long-term debt markets since 2010, and is surviving on an initial package of €110 billion ($146 billion) in rescue loans from its international creditors since May that year. But harsh austerity measures demanded in return for the emergency loans have hammered the economy, which is in decline since late 2008, with successive quarterly contractions since then, with the exception of the first quarter of 2010.Comment on this story
Fresh figures Tuesday showed that the country's economy shrank 7 percent in the fourth quarter compared with a year earlier.
Greece is also finalizing a debt write-off agreement with its private creditors, which would be equivalent to a debt relief of about €100 billion ($132.5 billion).
Steinhauser reported from Brussels; David McHugh in Frankfurt and Elena Becatoros in Athens contributed to this report.
Juergen Baetz can be reached on Twitter at: www.twitter.com/jbaetz