Eurogroup: 110 bln support package for Greece - The Best from Greece

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Posted on: 03/May/2010

Eurozone's finance ministers decided on Sunday evening to activate the support mechanism for Greece. According to Eurogroup President Jean Claude Juncker, the total amount of a three-year support mechanism would reach 110 billion euros of which 80 billion would come from the other 15 eurogroup countries and the 30 billion from the International Monetary Fund (IMF).

According to Juncker, who spoke during a joint press conference at the end of the finance ministers' meeting, the European Commission and the European Central Bank have ascertained that Greece's acess to international markets was not sufficient anymore, and for this reason the eurozone decided to activate the support mechanism together with all the legal and technical tools necessary for its activation in all eurozone countries.

Moreover, Juncker announced that a eurozone countries' summit would be taking place on May 7, noting that Sunday's decision would not be re-negociated.

On his part, Greek Finance Minister George Papaconstantinou expressed his satisfaction over the "eurozone's important decision for the activation of the mechanism", noting that the Greek programme is a liable three-year programme which "will lead to the country's fiscal adjustment, to its recovery, to the promotion of necessary fiscal reforms and to the increase of competitiveness."

Papaconstantinou also underlined the Greek government's committment to do everything necessary in order to put the country's economy on the track of viable growth.

The Greek government on Sunday announced a fiscal adjustment programme for the country, envisioning a 36.4-billion-euro reduction of the budget deficit over three years to bring down the current 13.6 percent deficit to under 3 percent of GDP by 2014, in the wake of nearly two weeks of negotiations with EU Commission, European Central Bank (ECB) and International Monetary Fund (IMF) officials in Athens.

The "laundry list" of state spending cuts, increased taxes, social security reforms and labour market deregulation pave the way for activation of an EU-IMF support mechanism for the Greek economy, agreed to last month.
A draft bill containing the latest austerity measures, reforms and structural changes for the period 2010-2014 will be tabled, debated and voted on in Parliament under an urgent process.

Among measures announced were an increase in the VAT coefficients from 21 to 23 percent, from 10 to 11 percent and from 5 to 5.5 percent, a 10-percent increase in consumption taxes on fuel, tobacco products, alcohol and "luxury" taxes, another one-off contribution by profit-making enterprises, increases in the objective values of real estate and the first-ever taxation of unlicenced buildings.

Papaconstantinou further announced a drastic reduction of the so-called 13th and 14th salaries for civil servants, applicable in both public and private sector pensions, an additional 8 percent cut in civil servants' benefits, reductions in larger pensions and a three-year salary and pension freeze.

The measures further contain drastic changes in the social security system and job market.

To a question on what will be done with those whom, according to the government, are responsible for creating the present situation in the economy, Papaconstantinou stressed that "we will punish those who are responsible, at all levels".



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