UPDATE: Greece To Freeze Public-Sector Wages To Cut Deficit
(Updates with more comments by the prime minister and other details)
ATHENS (Dow Jones)--Prime Minister George Papandreou on Tuesday announced a blanket freeze on salaries for civil servants as he outlined a host of measures to cut the country's ballooning budget deficit.
"We are living through an unprecedented crisis," Papandreou said in a nationally televised address. "It is an absolute priority to cut the deficit. By increasing revenues, by reducing waste, and by cutting spending."
Greece is facing intense scrutiny by the European Union, financial markets and credit ratings agencies after revealing a budget deficit last year that is expected to hit 12.7% of gross domestic product--four times the EU limit.
Last month, the newly elected Socialist government outlined a three-year plan of spending cuts and new tax measures to bring Greece's budget gap in line with EU rules by 2012.
Papandreou's remarks come just a day before the European Commission, the EU's executive arm, is due to pass judgement on the plan. The commission is expected to say the measures are feasible--albeit with a warning that further spending cuts and higher taxes may well be needed.
In his remarks, Papandreou said Greece will submit much-awaited legislation to reform the country's tax system next week--several weeks ahead of schedule. It aims to close dozens of tax loopholes and stamp out widespread tax evasion.
"There is abusive levels of tax evasion (in Greece) that unjustly burden all of society," Papandreou said.
Apart from the wage freeze, Papandreou also said Greece would move to raise fuel taxes, a measure that the government has so far resisted but one that is expected to generate several hundreds of millions of euros in revenue.
Papandreou also outlined measures that Greece has already pledged to take, including a 10% cut in spending by Greece's ministries, a 10% cut in supplementary salaries for civil servants, and a freeze on new public sector hiring.
Earlier Tuesday, Papandreou met with the heads of Greece's four opposition political parties in an effort to build a political consensus for the measures.
The Socialist government, elected in a landslide victory Oct. 4, controls a comfortable 160-seat majority in Greece's 300-member parliament. Recent opinion polls have shown widespread public support for the government.
-By Alkman Granitsas, Dow Jones Newswires; +30-210-331-2881; alkman.granitsas@dowjones.com |
