NEWS,24.06.2012

Greece outlines plan to ease bailout burden

 

Greece wants tax cuts, extra help for the poor and unemployed, a freeze on public sector lay-offs and more time to cut its deficit under a plan likely to run into strong opposition at a European Union summit next week.The new coalition government's programme, reflected public pressure to ease the terms of a 130 billion euro bailout saving Greece from bankruptcy but only at the cost of harsh economic suffering.If implemented in full, the new programme would undo many austerity measures the country agreed in February to clinch the bailout package, its second since 2010.Euro zone partners have offered adjustments but no radical rewrite of the bailout conditions, with paymaster Germany particularly resistant to Greek calls for leniency.Greece's programme includes a call for the recapitalisation of the country's fifth-largest lender, ATEbank - a state-owned agricultural bank that EU sources said this month was among several lenders the European Commission wanted to be wound down. The finance ministry has denied that report.The programme, agreed by leaders of the three-party coalition after a June 17 election, faces its first test at a two-day EU summit starting next Thursday and sure to be dominated by the debt crisis that started in Greece and is now threatening to engulf Italy and Spain, the euro zone's third and fourth-largest economies, respectively.Inspectors from Greece's "troika" of lenders  the EU, European Central Bank and International Monetary Fund  were due in Athens on Monday Tuesday  to review the country's progress.Euro zone officials have said the bailout package should be revised only to reflect time lost on two elections since early May and a deeper than expected recession."The general target is for there to be no further reductions in wages or pensions and no more taxes," the Greek government programme said.It called for a cut in the 23-percent value-added tax (sales tax) rate for restaurants and farmers, a freeze on lay-offs in the bloated public sector and for unemployment benefit to be paid for two years rather than one.The government will also ask for two more years, until 2016, to cut its budget deficit to 2.1% of national economic output from 9.3% in 2011, an extension that would require extra foreign funding.The lowest income tax threshold should be raised, the document said, and the minimum wage  cut by 22 percent in February  revised in line with agreements between employers and workers.The programme also calls for the accelerated payment of 6 billion euros of government debt to suppliers.The coalition brings together the conservative New Democracy, Socialist PASOK and Democratic Left in an alliance that will face constant pressure from an opposition led by the radical leftist Syriza bloc.Led by charismatic ex-communist Alexis Tsipras, Syriza surged into second place in the election on a vow to tear up the terms of the bailout.Conservative Prime Minister Antonis Samaras, a Harvard-educated economist who switched from opposing the first bailout to reluctantly supporting the second, has promised to soften the terms without jeopardising Greece's place in the euro zone."Though the troika will be in Athens on Tuesday, the crunch test will be Thursday's EU summit," the centre-left Ethnos daily wrote in an editorial on Saturday.

Greece aims to stem layoffs - policy plan

 

Greece's new coalition government will seek to stem layoffs and extend by two years the application period of a tough recovery plan imposed in return for EU-IMF loans, an official document said on Saturday.The policy document released by the conservative-led coalition government said an upcoming effort to "revise" Greece's EU-IMF bailout deal in talks with creditors includes "the extension of the fiscal adjustment by at least two years" to 2016.The aim would be to meet fiscal goals "without further cuts to salaries, pensions and public investment," it said, announcing a freeze on further civil service layoffs and a boost to unemployment benefits."The aim is to avoid layoffs of permanent staff, but to economise a serious amount through non-salary operational costs and less bureaucracy," the document said.The new government said it wanted to review minimum wage cuts and measures taken earlier this year to facilitate private-sector layoffs, arguing that collective labour agreements would "return to the level defined by European social law" and what Europeans have agreed on.It said employers and unions should be allowed to set the private sector minimum wage, which was cut by 22 percent to 586 euros ($736) in February among additional austerity measures taken to clinch a new rescue deal.Greece remains under intense international pressure to implement the terms of the EU-IMF bailout package that has kept the indebted country's economy afloat for two years.European Commission, IMF and European Central Bank inspectors return to Athens on Monday to resume discussions suspended because of Greece's two-month political deadlock brought to an end by elections last Sunday.