A top Greek court has struck down wage cuts imposed by the government in 2012 on police and armed forces to comply with the terms of the country’s EU-IMF bailout, court and government officials said today.

The ruling by the Council of State, Greece’s highest administrative court, could blow a hole of as much as €500 million in the country’s finances, a senior finance ministry official warned, further complicating already stalled talks with international lenders to release more rescue loans.

Its ruling that a 10 per cent wage cut for policemen and soldiers applied in 2012 was unconstitutional has not been made public but was confirmed by court and government officials after it was leaked to local media.

“They are a core part of the state and therefore deserve special protection,” a senior court official told Reuters on condition of anonymity.

Portugal’s constitutional court has also rejected austerity measures agreed by the government under its bailout.