Greece passes new austerity measures
Source: Agencies |
March 4, 2010, Thursday
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Print Edition
Print Edition
GREECE yesterday announced a new austerity plan worth 4.8 billion euros (US$6.5 billion) in savings to deal with the country's unprecedented financial crisis.
Government spokesman Giorgos Petalotis says the measures are split with 2.4 billion euros in new revenues like taxes and another 2.4 billion euros in spending cuts.
He said the measures include trimming civil servants' annual salaries with a 30 percent cut in their holiday bonuses, freezing pensions and imposing further cuts on stipends and bonuses.
Greece also increased the sales tax from 19 percent to 21 percent and hiked taxes on alcohol, cigarettes, luxury cars, yachts, precious stones and leather goods.
In a dramatic speech to members of his ruling PASOK party on Tuesday, Prime Minister George Papandreou compared his country's fiscal crisis to a war and said he would have to take harsh and possibly unfair measures.
All of Europe would be threatened if Greece failed to take brave decisions to cut a 300 billion euro debt mountain, bigger than the country's annual economic output, he said.
The new measures also included a freeze on public sector pensions this year.
The euro rose on foreign exchange markets on the news and Greece's borrowing costs fell further.
"The relief was evident in the money markets once Greece announced its additional austerity measures. This ... increases their chance of navigating through these troubles," said Peter Chatwell, rate strategist at Credit Agricole CIB.
Papandreou is scheduled to travel to Berlin tomorrow to meet German Chancellor Angela Merkel, who had demanded additional fiscal steps from Greece before considering any European financial safety net for the eurozone's weakest economy.
Government spokesman Giorgos Petalotis says the measures are split with 2.4 billion euros in new revenues like taxes and another 2.4 billion euros in spending cuts.
He said the measures include trimming civil servants' annual salaries with a 30 percent cut in their holiday bonuses, freezing pensions and imposing further cuts on stipends and bonuses.
Greece also increased the sales tax from 19 percent to 21 percent and hiked taxes on alcohol, cigarettes, luxury cars, yachts, precious stones and leather goods.
In a dramatic speech to members of his ruling PASOK party on Tuesday, Prime Minister George Papandreou compared his country's fiscal crisis to a war and said he would have to take harsh and possibly unfair measures.
All of Europe would be threatened if Greece failed to take brave decisions to cut a 300 billion euro debt mountain, bigger than the country's annual economic output, he said.
The new measures also included a freeze on public sector pensions this year.
The euro rose on foreign exchange markets on the news and Greece's borrowing costs fell further.
"The relief was evident in the money markets once Greece announced its additional austerity measures. This ... increases their chance of navigating through these troubles," said Peter Chatwell, rate strategist at Credit Agricole CIB.
Papandreou is scheduled to travel to Berlin tomorrow to meet German Chancellor Angela Merkel, who had demanded additional fiscal steps from Greece before considering any European financial safety net for the eurozone's weakest economy.
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