EU urges concrete measures to revamp economy

Latest update : 2009-12-15

The European Union's top Economic Commissioner Joaquin Almunia urged Greek Prime Minister George Papandreou (pictured)to take swift and concrete measures to stabilise the country's budgetary chaos.

AFP - The European Union's top economic enforcer Joaquin Almunia on Tuesday urged Greek Prime Minister George Papandreou to deliver "concrete measures" to fix the country's budgetary chaos.

"We take note of the Greek government's commitment -- as reiterated yesterday evening by Prime Minister Papandreou -- to cut public deficits and reduce government debt through permanent expenditure cuts and revenue increases," Economic and Monetary Affairs Commissioner Almunia said in a statement.

But he added that Brussels was eagerly awaiting "the spelling out in the stability programme, which is expected in the course of January, of concrete measures that will strengthen fiscal adjustment in 2010 and ensure a fast consolidation of public finances."

One week after the global ratings agency Fitch downgraded Greece's credit worthiness, sparking what Athens' finance minister said was the worst financial crisis in Greek history, Almunia said Papandreou's 2010 budget, under discussion in the Greek parliament, and other plans represented "steps in the right direction."

He was referring to moves that "strengthened the Greek government's intentions in relation to structural reforms in social security, the budgetary process, tax system, and the compilation of statistics."

But Almunia warned that the EU's budgetary watchdog will maintain a beady eye on "the macroeconomic and fiscal situation and the implementation of the measures," after the cost-cutting announcments were met with doubt and scepticism by market analysts.

Papandreou's proposals included curbs on public sector hiring and pay, a 10-percent cut in social security and "a significant reduction in military expenditures."

He also called for a 90-percent tax on bonuses at banks and an overhaul of the fiscal system in measures due to come into force from early 2010.

Greece's public deficit is set to rise to 12.7 percent of gross domestic product this year -- well above the 3.0 percent EU limit Papandreou is trying to restore.