Thursday

22nd Oct 2020

Commission welcomes fresh Greek austerity measures

The European Commission has said Greece's budget deficit plans are now on track, following the Greek government's announcement on Wednesday (3 March) of fresh austerity measures worth €4.8 billion.

"This announcement confirms the Greek government's commitment to take all necessary measures to deliver the [stability] programme's objectives," said commission president Jose Manuel Barroso in Brussels.

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  • Athens said the measures amounted to €4.8 billion (Photo: BOSSoNe0013)

"Greece's ambitious programme to correct its fiscal imbalances is now on track," he added.

Athens presented its budgetary plan - known as a 'stability programme' - to the commission in January, in which it pledged to reduce its budget deficit by four percent of GDP in 2010.

After a three-hour cabinet meeting on Wednesday morning, Greek government spokesman Giorgos Petalotis said the agreed new measures amounted to €4.8 billion, split between €2.4 billion in new revenues and €2.4 billion in spending cuts.

They include a dramatic 30 percent cut in the holiday bonuses of Greek civil servants.

The plans also include a 12 percent cut on other civil servant bonuses, a freeze on all pensions, a 2 percent rise in the VAT rate to 21 percent and a 20 percent increase in the tax on alcohol and tobacco, as well as an 8 cent-a-litre increase in the price of petrol.

There are also plans for a tax rise on luxury goods such as expensive cars.

A change of government in Athens last October, and subsequent upward revisal of the country's budget deficit figure for 2009 to 12.7 percent of GDP, shocked EU member states and financial markets, prompting a flight from the country's bond market and a weakening of the euro currency.

Since then the centre-left Pasok administration has struggled to convince markets it is capable of tackling the country's spiraling debt problem, with a EU monitoring mission to Greece last week warning austerity measures announced thus far would only reduce the budget deficit by two percent this year.

Bailout details in return?

In return for the fresh austerity measures, Greece is hoping for greater details of a bailout plan to be made public, a step which Athens argues will bring down its borrowing costs. Euro area states have so far resisted however.

"The time of Europe has come. We've done whatever we need to, Europe must do the same," Prime Minister George Papandreou reportedly told ministers during the cabinet meeting.

Greek hopes have recently centered on a meeting between Mr Papandreou and German chancellor Angela Merkel this Friday, but a German official said on Wednesday that Berlin would not offer financial aid to Greece at the meeting.

"The talks between the chancellor and the prime minister are not, in terms of content, for making any aid commitments," a German government spokesman said at a regular news conference.

Germany asks capitals to give a little in EU budget impasse

European Parliament negotiators are demanding €39bn in new funding for EU programmes such as Horizon research and Erasmus, in talks with the German EU presidency on the budget. Meanwhile, rule-of-law enforcement negotiations have only just begun.

EU budget talks suspended in fight for new funds

MEPs are requesting additional, new funding of €39bn for 15 EU programs. The German presidency argues that budget ceilings, agreed by EU leaders at a marathon summit in July, will be impossible to change without a new leaders' meeting.

EU countries stuck on rule of law-budget link

Divisions among EU governments remain between those who want to suspend EU funds if rule of law is not respected, and those who want to narrow down conditionality.

MEPs warn of 'significant gaps' in budget talks

The budget committee chair said the European Parliament expects tangible improvements to the package in its talks with member states - while the German minister argued that the EU leaders' deal was difficult enough.

Top EU officials urge MEPs give quick budget-deal approval

MEPs criticised the EU deal on the budget and recovery package clinched by leaders after five days of gruelling talks, saying it is not enough "future-oriented", and cuts too deeply into EU policies, including health, innovation, defence and humanitarian aid

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