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Europe

Greece unveils €2 billion in cuts to secure EU/IMF bailout

Text by News Wires

Latest update : 2011-09-12

Greece’s government announced some €2 billion in spending cuts and introduced a special tax on real estate Sunday in a bid to meet its stringent budget goals and secure another tranche of an EU/IMF rescue package.

AFP - Debt-ridden Greece on Sunday announced around two billion euros in new budget cuts as demanded by the EU and the IMF in exchange for a rescue package as Germany warned a Greek "orderly default" could not be ruled out.

Greek Finance Minister Evangelos Venizelos said a two billion euro shortfall had to be covered for the country to be able to meet its obligations while unveiling a special tax on real estate.

The minister told Greek television this "new national effort" was crucial given the unfavourable perception of Greece abroad, with renewed rumours of a debt default or Greece's possible exit from the Eurozone.

Germany's Economy Minister Philipp Roesler pointedly said, in a column to be published Monday, that Europe could no longer rule out an "orderly default" for Greece as it struggles with it crippling debt.

"To stabilise the euro, we must not take anything off the table in the short run," Roesler, who is also Germany's vice chancellor, wrote in the column for the conservative daily Die Welt.

"That includes as a worst-case scenario an orderly default for Greece if the necessary instruments for it are available," he said.

Eurozone leaders announced a 159-billion-euro ($223-billion) rescue package for Greece in July, but many Greeks fear the stringent conditions set for the money to trickle down will only make unemployment worse.

"Our immediate priority is the full respect of the budget targets for 2011," Venizelos said, with a deficit of 17.1 billion euros "including debt servicing" and "14.9 billion for 2012."

He stressed that Athens would continue to work as scheduled with the EU, the European Central Bank and the International Monetary but he pointed to "a changing landscape due to the position of some very important countries and with a decisive role in the Eurozone".

The key measure announced Sunday, the real estate tax, will vary according to the use, size and the location of the property, with "an average rate of four euros per square metre," and will be implemented immediately, Venizelos said.

The minister also announced that elected Greek officials "from the head of state to the mayors" would go without a month's salary" and that a meeting was planned with representatives of shipowners to see how they could contribute to straightening out the country's finances.

According to media reports Sunday, German Finance Minister Wolfgang Schaeuble doubts that Greece can avoid bankruptcy and is preparing for a scenario where the debt-stricken nation becomes insolvent.

German finance ministry officials are contemplating a scenario where the country stays in the eurozone and another where it re-introduces its former currency, the drachma, Spiegel magazine reported on its website.
 

Date created : 2011-09-12

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