Debt-stricken Greece needs to find another 23 billion euros ($33
billion) in savings by 2015 to meet deficit targets set in last year's international bailout, the finance minister said Wednesday."To reduce the public deficit, which has to hit 17 billion euros by end-2011 and three billion by 2015 -- that is, below three percent of GDP -- we need savings of 23 billion euros," Finance Minister George Papaconstantinou (photo) said.
The targets are laid out in a 2012-15 budget which will go to cabinet on Friday, official sources said.
Once approved by the government, it then goes to parliament before May 15, with a vote expected in early June.
Greece had to make savings of 14 billion euros in 2010, allowing it to reduce the public deficit by more than five percentage points to 10 percent of Gross Domestic Product after it was bailed out by the EU and IMF in May.
Papaconstantinou told a seminar in Athens that those savings had come through public sector wage cuts of 15 percent and pension cuts of 10 percent, adding that the new measures would not touch workers' pay.
The savings this time, he said, will come from cutting administrative costs and cracking down on tax evasion.
Greek press reports say two-thirds of the savings will come on the cost side and the rest from higher tax collection.
The finance minister said Greece will have to press ahead with its structural economic reforms, adding that the government will also announce state asset sales -- a very controversial measure.
Athens, pressed by the EU and International Monetary Fund, has agreed to a privatisation programme worth some 50 billion euros.
Earlier Thursday, analysts told a banking conference that global markets cannot be faulted for doubting Greece's economic recovery.
"We may hate the markets but we must persuade them because we have our backs to the wall," said Gikas Hardouvelis, chief economist and head of economic research at Greece's second largest lender, Eurobank.
"The market can overreact for 1-2 months but for a year? Something is going on," he argued at an asset management and banking conference.
The Greek government is struggling to keep the draconian overhaul of the recession-hit economy on track but markets remain hostile to any approach by Athens to raise fresh funds, demanding very high rates of return.
Although Athens has repeatedly ruled out the prospect, most analysts agree that the government will eventually have to restructure its debt load.
"Why do the markets believe there is a major chance of debt restructuring? Because they see a debt that keeps growing and doubt the progress," said Paul Mylonas, chief economist at leading Greek lender National Bank.
Source: AFP
