IMF begins inspection of Greek finances

The International Monetary Fund began inspecting Greece's public finances today to make sure the government is implementing promised austerity measures before it gains access to a second rescue loan instalment in mid-September.

The inspectors arrived as strikes continued against the painful spending cuts and an overhaul of labour rules.

A walkout by fuel-tanker drivers caused supply shortages in Athens, while serious departure delays were reported at Athens Airport as air traffic controllers continued a work-to-rule protest which started last week.

Officials from the European Union and European Central Bank are also taking part in the inspections in Athens and are due to remain until August 6.

Debt-ridden Greece narrowly avoided bankruptcy in May and was pledged up to €110bn in rescue loans from the IMF and the 15 other EU countries using the euro.

While in Athens, the inspectors will meet at least five other Cabinet ministers, union leaders, central bankers and the board of the newly independent Greek statistics agency, tasked with cleaning up a budget-figure misreporting scandal that helped trigger the country's crisis.

Greek financial officials say the latest scrutiny is expected to concentrate on massive public healthcare debts and the prospects of loss-making state enterprises like the national railways.

"The main thing is that we are on course for our (deficit reduction) targets," Ilias Plaskovitis, general secretary of the finance ministry, told state-run NET television. "Of course, there is always more to be done."

Greece said its painful cuts program is working, and last week reported that its effort to slash the country's budget deficit from 13.6% of gross domestic product in 2009 to 8.1% remains on track.

It reported a 45.4% year-on-year decline for the first six months of 2010 - that remains ahead of the 39.5% annual target.

Greek officials say their prediction of a 4% contraction in Greek economic output this year now seems too severe.

The IMF, in an interim report released this month, praised progress made by Greece's centre-left government in curbing spending and pushing through unpopular reforms to overhaul the pension and labour systems.