Greece Vows 'Great Sacrifices' to Repay EU, IMF Bailout

Greek Prime Minister George Papandreou enters a hall where a cabinet meeting takes place in the Greek Parliament in Athens to discuss the bailout deal with the EU and IMF. Photo by BGNES

Greece will receive financial assistance in the amount of at least EUR 110 B after it reached an agreement with the EU and the IMF late Saturday evening.

On Sunday, the Greek government unveiled some details about the austerity measures the cabinet will have to commit to in exchange for the huge financial help.

Prime Minister, George Papandreou, said during the cabinet meeting, broadcast live on Greek TV, that the country must make great sacrifices and active and retired public sector workers would bear the brunt of the drastic of budget cuts.

"Our national red line is to avoid bankruptcy," Papandreou is quoted saying, adding that "no-one could have imagined" the size of the debt that the previous government, which left office last year, had left behind.

The austerity measures aim to achieve budget cuts of EUR 30 B in the next three years and reduce Greece's deficit to less than 3% of the Gross Domestic Product (GDP) by 2014 from the current 13.6%.

Some of the stated measures include: eliminating bonus payments for public sector workers, capping annual holiday bonuses and scrapping them all together for high-income employees, banning increases in public sector salaries and pensions for at least three years, increasing VAT from 21% to 23%, raising taxes on fuel, alcohol and tobacco by 10% and taxing illegal construction

German Chancellor Angela Merkel, known as a strong opponent of the bailout, said before the German press that Greece's austerity plans were "very ambitious" and would spur other troubled Eurozone to do all they could to avoid the same fate.

The Greek economy is still deep in recession and on Sunday the government forecast that GDP would fall by 4% in 2010.

The bailout must first be approved by the Eurozone finance ministers, who are holding a meeting in Brussels.

The announcement about the deal comes a day after demonstrators, who rallied against the austerity cuts, clashed with police in Athens where a state TV truck was petrol-bombed and a prominent hotel was vandalized in the central Syntagma square.

Thousands of Greeks took part in May Day rallies called by trade unions and left-wing parties. Protesters hurled bottles and rocks and fought running battles with police in riot gear.

 

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