DEBT-SADDLED Greece moved closer yesterday to getting the vital bailout funds it needs to avoid a disastrous default after persuading international debt inspectors to return to Athens and resume reviewing its austerity program.

Greece is expected to get the next 8 billion euros (US$11 billion) batch of aid money. Without the money, the country would default on its debts within weeks, a major blow to the European banking scene and wider economy.

The decision to resume the review early next week implies that Finance Minister Evangelos Venizelos convinced officials from the European Commission, the European Central Bank and the International Monetary Fund that Greece will be able to cut its budget deficit in line with promises made last year in return for 110 billion euros in rescue loans.

“Good progress was made, and technical discussions will continue in Athens over the coming days,” an European Commission statement said after a two-hour conference call between the so-called troika and Venizelos. “The full mission is now expected to come back to Athens early next week to resume the review, including policy discussions.”

A European Commission spokesman declined to say whether Venizelos offered new cuts or taxes beyond what has already been announced. The Greek finance ministry said technical experts were still finalizing spending plans for 2011 and 2012 and that talks would resume at the annual IMF meeting in Washington this weekend.

Prime Minister George Papandreou will chair a Greek ministerial meeting today that is expected to focus on the outcome of the teleconference.

The troika’s assessment of Greece’s efforts to cut spending, privatize state assets and reform its struggling economy is key to euro zone finance ministers’ decision on whether to transfer the next aid installment at their meeting in early October. The money had originally been expected in September, but the troika left Athens earlier this month amid disagreements over whether Greece was fulfilling its promises.

Without the aid money, Greece’s cash reserves will run out around mid-October, forcing it to stop paying public-sector salaries and eventually default on its debt. A default could plunge Europe’s banking system into turmoil and potentially push Europe and other parts of the world back into recession.

Greece has been depending on rescue loans from other euro zone countries and the IMF since May 2010, when its borrowing costs went through the roof following revelations Athens had been underreporting data on an alarmingly bloated budget deficit and public debt.

In July, euro zone leaders agreed on a second, 109-billion-euro bailout supposed to keep the country afloat until mid-2014, when they realized that the first rescue package would not be enough. (SD-Agencies)