Greek austerity plan falls short of target

greenback

By Steve Gelsi and Chris Oliver, MarketWatch

HONG KONG (MarketWatch) — The Greek government said Sunday it won’t meet its deficit target this year, while it pushed ahead with a plan to cut thousands of public-sector jobs as demanded by European lenders, according to reports.

The draft budget calls for a deficit of 8.5% of Greece’s gross domestic product in 2011, falling short of a target of 7.6%, the BBC reported.

The deficit will be reduced to 6.8% of GDP in 2012, but still short of the mark of 6.5% of GDP, according to the plan.

Greece’s plan involves 6.6 billion euros ($8.8 billion) in new austerity measures through 2012 to bring its budget into closer alignment with the earlier targets.

“I want to repeat that we will be unswerving in our goal: to fulfill all that we have promised to ensure the credibility of our country,” Greek Prime Minister George Papandreou was quoted as saying at an extraordinary cabinet meeting on Sunday, according to The Wall Street Journal.

Parliament may vote on the package as early as Monday, according to reports.

Among the measures under consideration were the layoff of or reduced pay for 30,000 government workers, according to reports.

Wall Street will be closely watching developments in the Greek debt crisis, says MarketWatch’s Laura Mandaro.

Greece is seeking a tranche of aid totaling $10.7 billion as part of a larger bailout package promised early last year by the group charged with helping Greece, known as “the Troika” and consisting of the European Union, International Monetary Fund and the European Central Bank.

Greece needs the latest round of aid to avoid running out of money by mid-October, according to the reports.

On Thursday, the Greek government met with officials from the Troika, with officials reportedly describing the gathering as “positive and constructive.”

The meeting was part of a review to determine whether Greece had met its reform targets to receive the next installment of bailout funds.

Also last week, Greek Finance Minister Evangelos Venizelos welcomed the German parliament’s support for the euro-zone rescue fund and stressed that Greece is committed to meeting its obligations.

The German parliament voted overwhelmingly to increase the size and flexibility of the euro-zone rescue fund, providing an important victory for Chancellor Angela Merkel as she battles growing public skepticism over the country’s role in bailing out its currency-zone partners. See story about German lawmakers approving bigger rescue fund.

Steve Gelsi is a reporter for MarketWatch in New York. Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.

austinjoe

shyshark

mengtt