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Additional measures to reduce government deficit, if Greece wants to get out of the financial crisis

01 February 2010 / 11:02:23  GRReporter
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Reduce the total amount of wages in the public sector, not just bonuses is one of the recommendations of the EU Financial Issues commissioner Joaquim Almunia, heard on the international economic forum in Davos. So far, the PASOK government has planned for a 20% reduction of public employee bonuses, as part of the Stability and Development Program. According to European experts salary expenses in the public sector should be cut by reducing average wages. 

The measures in the program are in the “right direction" but are not enough, is the opinion of the European observers. The official report of the European Commission for adoption of the Greek stability program is about to be released on February 16 this year. Experts from Brussels are pushing for the implementation of additional measures, which will reduce public deficit from 12.7% of GDP to the healthy for the Eurozone countries 3% of GDP in 2012. Their recommendations include tightening the financial control in the country, freeze pensions and social supplements, increasing excise duty on fuels and increasing the tax on luxury goods. It is imperative for the Greek government to fulfill its promise that in 2010 will not open new jobs in the public sector and over the next four years it should follow a policy of one to four (for every four retired or fired employees, only one new employee should be appointed). Immediate reform in the social security and pension system should be made, which should gradually increase the retirement age for both men and women. The European Commissioners expect tangible results from the implementation of all measures (programmed and additional), in order to restore the Greek economy in early May. Meanwhile, Finance Minister Giorgos Papakonstantinou said in an interview for an international media that the first reduction in the value of the public deficit will be noted in the middle of this month. 

During the World Economic Forum in Davos, it became clear that aid for Greece will be available only from European financial institutions such as the European Central Bank and European Investment Bank and not from Member States in the Eurozone. An important condition for providing that assistance is strict adherence and implementation of the obligations of Greece to the Stability Treaty and implementation of measures for the rescue of local economy. "German and French taxpayers will not pay for the salvation of Greece," said German Finance Minister Rainer Brϋderle and added: "I think Greeks have to deal with this problem by themselves."

Tags: Davos World Economic Forum Papakonstantinou Greece Economy
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