Troika to return to Athens next week

“The full mission is now expected to come back to Athens early next week to resume the review, including policy discussions.”

A statement from the Greek finance ministry also described the talks as delivering “satisfactory progress”.

The talks over the last two days have centred on what measures can be adopted immediately to assure international lenders that the country can cut this year’s deficit.

According to local reports, the measures involve hikes in taxes on drinks, tobacco, utilities and roads as well as municipal taxes and an equalisation of taxation on heating oil and fuel.

Public-sector workers are likely to see salaries slashed by up to 50 percent and caps on pensions are to be introduced.

Tens of thousands of civil servants are to be sacked or placed in a labour reserve status by the end of the month. The final number of those who will lose their job remains unknown but as many as 100,000 individuals could be affected.

The troika is also demanding the immediate closure or merger of a range of publicly-owned enterprises.

The prime minister is to hold a cabinet meeting on Wednesday morning to outline what was agreed in the conference calls.

Separately, the Italian government has also said that it is drafting fresh measures to boost the country’s ailing economy after its credit rating was downgraded by Standard & Poor’s on Monday.

Finance minister Giulio Tremonti said on Tuesday that the plans include fiscal incentives to boost private-sector investment in high-speed internet and a highway from Rome to Venice.

The incentives will be unveiled in a decree before the end of the month, while further decrees will be announced by the end of 2011 privatising local utilities and liberalising the services sector.