Greek PM Samaras urges European leaders to adopt growth policies as country suffers recession

ATHENS, Greece — Greece's prime minister on Monday urged European leaders to shift economic policies toward generating growth, as the country's bailout monitors complained it was making "slow progress" on key long-term reforms.

Antonis Samaras warned Greece's recession was hurting the government's efforts to reduce debt. It was "worsening problems that we must solve and complicating reforms which we must complete," he said.

But Samaras, who held talks in Athens with Italian Premier Enrico Letta, said a Greek recovery would not be possible unless the group of 17 European Union countries that use the euro emerges from recession.

"Greece, Italy and all of Europe are in need of policies that combine reforms and deficit reduction with growth," Samaras said. "Of course we cannot have growth while Europe is retreating into recession."

The eurozone has been in recession for 18 months, while Greece's economy has been contracting rapidly since late 2008 and remains in serious crisis.

Greece's public finances have been kept afloat since 2010 by a recue loan program funded by eurozone countries and the International Monetary Fund set to total 240 billion euros ($319 billion). But austerity reforms demanded in return for the money have triggered a dramatic increase in poverty and unemployment.

In a 234-page report released Monday, the European Commission, the EU executive branch that helps monitor the bailout program, recommended disbursement of a 2.5-billion euro rescue loan payment to Greece in the next couple of days.

But the European Commission also said Greece was still lagging behind in its effort to reform public administration, its business rules, power utilities, and its generally slow justice system.

"Greece continues to make overall, albeit often slow, progress ... with several important actions being delayed," the report said.

It warned the outlook for this year and next remains highly uncertain. The budget deficit is expected to exceed the official target by 1.75 and 2 percentage points of annual GDP in 2015 and 2016.

To make up for the shortfall this year and next, Greece has agreed to implement a new tax on luxury products, raise court fees for lawsuits, impose a docking fee for leisure boats in October and further cut military spending.

In Washington, IMF Managing Director Christine Lagarde said Greece needed to take urgent steps to make its privatization program more effective. She praised the country for getting its budget and external finances in better shape but said Greece needed to do more on improving tax collection and other structural changes to the economy in order to recover.

On the upside, the European Commission report said tourism, a key earner worth about 16 percent of Greece's annual output, is expected to do well this year, with pre-bookings data suggesting arrivals are set to increase more than 10 percent compared with 2012.

Italian Premier Letta appeared to agree with Samaras that bailout lenders were too focused on debt cuts rather than economic growth, and was sharply critical of how Greece's rescue was handled.