Greece sticks to austerity plan, deficit-cutting goal

Greece sticks to austerity plan, deficit-cutting goal
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First Published: Sun, Feb 07 2010. 10 39 PM IST
Updated: Sun, Feb 07 2010. 10 39 PM IST
Athens: Greece will stick to its deficit-cutting plan and the first three months of the year will be crucial for regaining investors’ and the European Union’s (EU) confidence, the country’s finance minister said in an interview on Sunday.
“As far as the budget is concerned, every day is a crucial test for us. The monthly figures we release are scrutinized by the markets and the (European) Commission, but the first quarter will be certainly crucial,” finance minister George Papaconstantinou said in an interview published in Greek newspaper Ethnos.
“The measures we have already announced will be implemented unswervingly and will pay off,” he added.
In its fiscal plan endorsed by the EU last week, Greece aims to reduce its ballooning deficit to below 3% of its gross domestic product by 2012 from 12.7% in 2009, the euro zone’s highest.
The government has said it will cut waste in the public sector and reform taxation to achieve the target, but the EU has said it wanted further details by 16 March on the steps planned and world markets still doubted their effectiveness.
World stock markets slumped to three-month lows on Friday, partly on fear the Greece fiscal crisis would spread to other countries in the EU periphery, while the euro fell to an eight-and-a-half month low against the dollar.
How the government will tackle its fiscal woes is expected to be seen this week when it plans to unveil new tax and wage policy Bills. Papaconstantinou said both Bills will be fair.
“Under these circumstances, all of us need to contribute in a fair way, according to our capabilities, while the weakest will be protected,” he said. “The plan for cutting waste in the public sector is moving in this direction and the tax Bill will be moving in this direction as well.”
Papaconstantinou reiterated the Bill will aim at fighting tax evasion and will abolish flat-rate taxation for certain professional groups.
But such measures are opposed by the country’s main labour unions which plan to walk off their jobs later in the month.
Greece’s civil servants union ADEDY will stage a 24-hour strike on Tuesday to protest against the austerity plan, the first serious test to the government’s economic policy. Greek private sector workers also plan to call a strike on 24 February.
Despite this planned action, most Greeks back the government’s economic policy and consider the fiscal measures announced as necessary and fair, according two polls published in the weekend.
In a survey conducted by pollster Kapa Research and published in newspaper To Vima on Sunday, some 64% of participants said the measures were essential.
But 30.4% said the steps were not enough to help curb Greece’s borrowing costs and avert a further rating downgrade of the country.
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First Published: Sun, Feb 07 2010. 10 39 PM IST
More Topics: Greece | Deficit | Austerity | GDP | Economy |