Brussels, 24/05/2011 (Agence Europe) - The European Commission says that the renewed pledges by the Greek government to respect the 2011 budget targets by introducing new austerity measures and speeding through the privatisation programme hold water. On Tuesday 24 May, however, the main Greek opposition party rejected the new austerity measures.
On Tuesday 24 May, a spokesperson for EU Economic and Monetary Affairs Commissioner Olli Rehn said the European Commission welcomed the reaffirmed determination of the Greek government to respect the budget targets of reducing the public deficit to 7.5% in 2011 and to move forward immediately with the privatisation programme The details of the measures will be discussed over the next few days with the European Commission, the European Central Bank and the International Monetary Fund, along with the decision to set up a “sovereign fund” to accelerate the privatisation process, explained the spokesperson. The privatisations are expected to net €50 billion by 2015.
In order to slim its budget deficit down to 7.5% this year, further austerity measures to the tune of €1.6 billion will be needed, on top of the existing measures (to save €4.8 billion). On Monday, Greek Finance Minister George Papaconstantinou said the detailed measures and the medium-term budget strategy to reduce the public deficit to close to 1% of GDP by 2015 would be announced at the end of the fact-finding mission by Greece's creditors. The state's stake in various public enterprises, OTE, Postbank, the port of Athens and the port of Thessalonica, will immediately be put up for sale. Greece's international creditors have made these measures a precondition for the payment of a loan of €12 billion, without which, warned Greek Prime Minister George Papandreou on Sunday, the country would “most likely” go bankrupt.
Europeans repeatedly demand that the big political parties in Greece express support for the main objectives of the austerity programme although Papandreou's government has a comfortable majority. Commissioner Rehn said last week that such pledges had been made in Ireland and Portugal and so should be possible in Greece too. AFP reports, however, that on Tuesday, Antonis Samaras, head of the leading opposition party, New Democracy, rejected the government's new austerity measures: “I will not agree to a recipe that is a proven failure”. He said that the plan would bring “more recession, not lower deficits”.
Speaking at the OECD annual forum in Paris on Tuesday, the president of the European Council, Herman Van Rompuy warned: “There's a real danger that one form or another of debt restructuring or rescheduling will aggravate the situation.” (M.B./transl.fl)