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Greece to make cuts of 4.8 billion euros: state TV
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Greece to make cuts of 4.8 billion euros: state TV
AFP - Thursday, March 4
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Greek taxi drivers block Syntagma Square in Athens during a 48-hour strike to protest the government's fiscal reforms. Greece will reveal additional austerity cuts worth 4.8 billion euros ($6.5 billion) in a bid to rescue its debt-stricken economy, state television NET has reported.
ATHENS (AFP) - – Greece will reveal additional austerity cuts worth 4.8 billion euros (6.5 billion dollars) on Wednesday in a bid to rescue its debt-stricken economy, state television NET reported.
NET reported that the crisis package -- the third announced so far -- will include a two-percent rise in sales tax, a pension freeze, and a cut in holiday allowance for civil servants who have already been targeted by benefit cuts.
Financial markets focused on the expected official announcements in Athens, with a sense that some improvement in the European-wide climate surrounding the crisis might emerge.
Prime Minister George Papandreou warned on Tuesday that the country was in a "wartime" type of crisis and risked bankruptcy if it did not come up with credible measures.
Before the figure was reported, analysts at UniCredit in Milan said: "We expect that new fiscal measures will be worth at least 5.0 billion euros, or 2.1 percent of gross domestic product, mostly on the expenditure side."
They said: "The phase-in of a major pension reform should also be part of the announced fiscal package.
They said it appeared that European Union auditors had concluded that measures announced previously would have produced only half of the correction which Greece had undertaken to make.
Greece has responded to EU pressure by saying that it will reduce its public deficit this year by four percentage points from 12.7 percent last year. Related article: EU unveils 2020 vision
On the foreign exchange market in London, the euro held firm as traders awaited hard news. Commerzbank analyst Antje Praefcke said that "Greece remains the dominant driver for euro/dollar" and that "there is the possibility of positive news from Greece supporting the euro today."
At Capital Economics, Bey May said: "The fiscal measures announced by Greece today should allow the government to ease the short-term pressure on its finances with a bond issue and may lead to firmer support from other countries."
The Socialist government is expected to make an imminent announcement on the measures after Greek Prime Minister George Papandreou has briefed President Carolos Papoulias.
Greece has been at the centre of a fiscal storm since revealing last year that its budget deficit was more than double than originally thought, and over four times the allowed three-percent ceiling imposed by the European Union.
It has also been at pains to persuade Brussels and sceptical markets that it can continue to finance a debt mountain of nearly 300 billion euros (407 billion dollars).
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