Friday, June 10, 2011

Greece OK's new austerity measures

Greek Prime Minister George Papandreou

Source: Press TV

New austerity measures have been approved by the Greek government in a move to save the country's economy from collapsing under a mountain of debt.

At a six-hour cabinet meeting on Thursday, Prime Minister George Papandreou appealed for unity over the measures he presented and backed fresh austerity measures including a wave of privatizations, AFP reported.

"We are at a crucial juncture... I will insist that this plan is approved with a big majority... and I will invite all the parties in parliament to a dialogue and to cooperation," Papandreou said.

Finance Minister George Papaconstantinou also told reporters the cabinet approved the mid-term plan and submitted it to parliament.

The new wave of austerity measures was called for by the European Union and the International Monetary Fund (IMF) after they offered Greece a 110-billion-euro ($160 billion) bailout loan package last year.

The renewed austerity measures for 2012-2015 suggested would yield an estimated 28.5 billion euros of savings, including 6.4 billion euros this year.

The overall plan is designed to help Athens regain access to borrowing markets but investors remain unconvinced and credit rates have risen instead of falling.

The eurozone's chief policy maker Jean-Claude Juncker told journalists in Luxembourg, "It is obvious that there will be a second program for Greece on top of last year's 110 billion euros."

"I am in the middle of negotiating a global solution for Greece," he added.

The EU and the IMF have demanded proof of reforms before approving further aid, which could be more than 90 billion euros from a mixture of new loans, Greek asset sales, and rolling over privately-held Greek debt.

The IMF has also threatened to hold back its next scheduled slice of loan funding -- part of an overall 12-billion-euro installment Athens needs to pay next month's bills -- if Europe cannot provide a long-term solution to Greece's woes.

In Frankfurt, European Central Bank chief Jean-Claude Trichet insisted there should be no debt restructuring for Greece.

With unemployment running over 16 percent in Greece and first quarter economic growth of just 0.2 percent, social and political tension is rising with every turn of the budgetary screw.

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