EU auditors ask Greece for stricter deficit reduction measures

09:34, January 09, 2010      

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A European Union (EU) Commission auditing team on Friday asked the Greek government to urgently adopt more austere measures on deficit reduction.

The team, led by Jurgen Kroger, visited Athens for a three-day consultation with the Greek government on the country's efforts to reduce its big budget deficit.

But ministers who held meetings with the auditors stood by Greek Prime Minister George Papandreou's pledge that the approach to solving problems of the Greek national economy would be as mild as possible to Greeks on low incomes.

EU inspectors recommended reductions of wages in the public sector and pensions of up to 7 percent, the abolishment of early retirement and a more flexible labor market, local media reported.

Minister of Labor Andreas Loverdos promptly rejected the idea of reducing pensions and Ministry of Defence officials commented that "we face an unprecedented interference, even in matters relating to the core of our national sovereignty."

The Finance Minister Friday announced an updated Stability and Growth Program, which was based on increasing public revenue through measures such as fighting tax evasion and increasing tax on cigarettes and alcohol by 20 percent.

But EU envoys questioned the effectiveness of the program and insisted on drastic cuts to public spending.

Greece's credit rating has been downgraded by three international rating agencies in the past two months, sparking fears of wider instability in the eurozone, and the country is under pressure from Brussels to speed up efforts to reduce the budget deficit, which currently stands at 12.7 percent of GDP to the 3 percent EU limit within three years.

The Greek government expects that, if its policies are implemented fully, the first positive sign of growth will appear in 2011.

But other member states of the EU have asked for more action. Greece's revised Stability and Growth Program will be submitted to the European Commission later in January and to the EU's Economic and Financial Affairs Council for approval in February.

Meanwhile, unions have warned of a wave of strikes and protests in February if they deem the burden of the new measures unbearable for low-income Greeks.

Source: Xinhua
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