Wall Street Journal
June 2, 2011
Sometime later today, or maybe tomorrow, Greece is expected to wrap up month-long talks with the so-called troika of European and International Monetary Fund officials over a new five-year austerity package to bring down its deficit.
The details of the package are unknown, but the broad outlines can already be discerned. In exchange for the next tranche of an existing €110 billion loan from its euro zone partners and the IMF, Greece will undertake some €28.4 billion worth of fresh spending cuts and new taxes on top of those it has already taken. It will also kick start its ambitious, but long-delayed, €50 billion privatization plan.
Those are big numbers for Greece’s relatively small economy. And the new measures are sure to cause a lot more pain in a country that is already slogging through its third year of recession. The government is thought to be considering a raft of additional measures, ranging from new taxes on basic foodstuffs (unlikely) to further cuts in civil servants’ salaries (likely).
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