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Europe

Debt-saddled Greece goes the extra mile in bid to sway EU

Text by FRANCE 24

Latest update : 2010-03-04

Greece's embattled government has announced further austerity measures, including tax rises and spending cuts, in an increasingly frantic effort to persuade its EU partners to bail it out.

Greece announced tough new austerity measures Wednesday, in a last ditch effort to reign in its unruly deficit. The country has been under careful scrutiny since its government reported a whopping 300 billion euros in debt and a budget deficit amounting to 13 percent of GDP last year.

The austerity measures are a way of proving to its fellow EU member countries tha

t Greece can tighten its purse and stave off national bankruptcy.

“I informed the president of the difficult decision that we took”, said Greek Prime Minister George Papandreou. “Decisions that were not made by choice, but were necessary for the survival of the country and for the economy”.

Measures put forward include an increase in the national sales tax from 19 to 21 percent, a 30 percent cut in civil servant benefits and a pension freeze. The announcement of the austerity package, the third since the start of the crisis, sparked angry protests in the Greek capital on Wednesday.

“They should be ashamed, they ruined Greece, our people are beaten, they’ve already made so many sacrifices. They should leave government”, said an angry woman taking part in a pensioner’s demonstration Wednesday morning.

Civil servant unions in Greece have also called for a 24-hour general strike on March 16 in protest at the new measures.

Europe’s reaction

The European Commission (EC) came out in support of Greece’s efforts to reform its broken economy, with its president, Jose Manuel Barroso, applauding the country’s “ambitious” new austerity measures.

“Greece's ambitious programme to correct its fiscal imbalances is now on track,” Barroso said Wednesday, adding that "the commission fully supports Greece in this endeavour”.

Greece is hoping that the combined measures will slash as much as 4.8 billion euros from the 2010 public budget, and gradually bring down the country’s budget deficit to 2.8 percent of GDP by 2012.

The austerity measures are also seen as crucial to convincing Greece’s EU partners, chiefly France and Germany, to come to the rescue.

Bailout?

FRANCE 24 correspondant Abby d'Arcy Hughes reports from Berlin, Germany

“These measures had to be implemented ahead of Greek Prime Minister George Papandreou’s meeting with German Chancellor Angela Merkel on Friday and then French President Nicolas Sarkozy on Sunday,” said Raphael Kahane, FRANCE 24’s business editor.

“(Papandreou) has got to give reassurances to these two leaders that he is determined to tackle this number one problem –the huge budget defecit – if they are to extend a helping hand,” Kahane continued.

In the meantime, Greece has not ruled out going to the International Monetary Fund for aid if the EU chooses not to extend the “helping hand” it is looking for.

Date created : 2010-03-03

  • GREECE

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