October 2, 2011
Greece approved 6.6 billion euros ($8.8 billion) of austerity measures for this year and in 2012, including firing state workers, to meet revised deficit targets and satisfy the terms of a European Union-led rescue.
The measures will help reduce the budget deficit to 6.8 percent of gross domestic product, or 14.7 billion euros, from 8.5 percent of GDP this year, the Athens-based Finance Ministry said in an e-mail statement today. That compares with 6.5 percent under agreements with the EU, International Monetary Fund and European Central Bank, the so-called troika, to secure the emergency loans needed to prevent a default.
Prime Minister George Papandreou’s efforts to reduce the budget shortfall have been hurt by the country’s deepening recession that has left revenue falling short of targets. European Union leaders on July 21 agreed on a second aid package to cover the financing gap following a 110 billion-euro bailout last year.
The economy is forecast to shrink 5.5 percent this year, more than the 3.8 percent forecast by the EU and IMF in June, according to the statement.
Greece announced the measures on the eve of a meeting of European finance ministers who gather in Luxembourg to weigh the threat of a Greek default, grapple with how to shield banks from the fallout and consider a further boost to the region’s rescue that will provide Greece’s second bailout.
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