Greece Unveils New Measures to Prevent Default | Greece

Greece Unveils New Measures to Prevent Default
SE Times

Greek Prime Minister George Papandreou vowed on Sunday (September 11th) that his government will honour the commitments it has made to international lenders and that it will spare no effort to prevent the country from defaulting on its huge sovereign debt.

"I will not do anyone the favour of allowing the country to collapse," he told reporters in the northern port city of Thessaloniki, where several thousand demonstrators protesting against the government's austerity drive clashed with police the previous night.

"I would rather that we all lose something than that we should all lose everything forever," Papandreou stressed, shortly after his cabinet decided to impose a series of fresh painful measures.

The new steps Finance Minister Evangelos Venizelos unveiled earlier on Sunday are aimed at meeting the fiscal targets agreed with international creditors last year and securing the next tranche under Greece's first, 110-billion-euro bailout from the EU and the IMF.

The government hopes the measures, including a new property tax to be in force for two years, will help it raise the 2 billion euros it needs to close a budget gap that has widened 25% in the first seven months of this year owing to deepening recession. The EU and the IMF have warned Athens that it must meet its deficit target of 17.1 billion euros in 2011 to qualify for further payments from its rescue package.

Stressing at a news conference on Sunday that the government had no other option but to take every step needed to cover the budget shortfall, Venizelos was also quoted as saying that the next two months would be "hellish" for Greeks.

"We have to do everything we can to emerge from this difficult situation," the minister said after an informal cabinet meeting in Thessaloniki, according to Bloomberg news agency. "We cannot give anyone a pretext to say that we are at fault."

The new real estate tax that will be collected this year and in 2012 will range from 50 cents to 10 euros per square metre, depending on the value of the property, Venizelos explained. He also noted noting that the charges will be added to electricity bills to thwart tax evasion.

As part of efforts to reduce public spending, the Greek cabinet has also decided to cut back a month's salary from all elected officials -- from the head of state down to the country's mayors. Observers, however, viewed that as a largely symbolic measure.

Papandreou said the new measures were vitally needed, likening the current severe fiscal crisis Greece is going through to a situation of war.

"This is a battle for the country's survival," the prime minister said. "These measures are the supplies we need to fight."

The measures were announced ahead of a new visit to Greece by EU, IMF and European Central Bank (ECB) experts to decide whether Athens can be granted the sixth 8-billion-euro tranche from the emergency aid package agreed in May 2010.

They arrived for a review of the Balkan country's implementation of the terms of the bailout accord on September 2nd, but the talks broke down after a row over the size of the country's budget shortfall and its cause, and the mission left Athens earlier than expected.

Just days before their upcoming visit, Greece's Deputy Finance Minister Filippos Sachinidis said on Monday that his country will soon run out of cash.

"We have definitely maneuvering space within October," Reuters quoted the official as saying in an interview on television channel Mega, when asked about how much longer the government will be able to pay pensions and salaries. "We are trying to make sure the state can continue to operate without problems," Sachinidis added.

The news came amid growing fears that Greece will not be able to avoid defaulting on its sovereign debt, with even German officials openly hinting about such a possibility.

"To stabilise the euro, there can no longer be any taboos," German Economy Minister Philipp Roesler, told the country's Die Welt newspaper. "That includes, if necessary, an orderly bankruptcy of Greece, if the required instruments are available."

- Provided by Southeast European Times