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Government announced austerity plan

» PM: “Sacrifices will Bear Fruits”

The government announced yesterday an additional set of measures bound to slash the double-digit public deficit.
Speaking yesterday at a Cabinet meeting, Prime Minister Papandreou said that the emphasis is now shifting to what the European Union will do. 
The new measures aim at bringing into public coffers some €4.8 billion, amount which corresponds to 2% of the country’s GDP.  

» Pay Cuts

In particular, the new measures include a 30% pay cut of public sector’s supplements allocated annually, and a 12% across the board cut of public servants’ benefits. Moreover, subsidies to public entities and their social security funds will be reduced by 10%.
Any additional remuneration in the public sector will be trimmed by 50%, and compensation for overtime work will shrink by 30%.

Executive bonuses in the public sector will be abolished and the Public Investment Budget will be curtailed by 5% (€500 million). As of 2011, the ratio for public sector hirings will be one for every five retirees.

» Taxation

VAT is expected to rise at all cases by an average 1% to 2% and an extra levy on fuel, cigarettes, liqueur and luxury products will be imposed.
A one-off tax of 1% on personal incomes above €100.000 will also be introduced, together with a 15% rise in taxation of offshore companies’ real estate property.
Kathimerini daily: Further Cuts and Tax Hikes Announced


Tax and spending policy

» PM: Tackling Economic Woes

(GREEK NEWS AGENDA) Prime Minister George Papandreou chaired a Cabinet meeting that discussed the draft tax bill and public-sector incomes policy.
He said that the government’s efforts to tackle the country’s economic problems will focus on three axes: reducing public debt, promoting growth, and accelerating legislative and institutional measures.
Papandreou stressed that the government’s primary duty was to save the economy, striving for fair solutions that would protect the lower and middle classes as much as possible.

» FinMin: New Tax Rates

A range of public spending cuts and tax adjustments were presented by the government yesterday, following an announcement last week by the premier that drastic measures would be taken to prevent Greece from defaulting.
Finance Minister George Papaconstantinou unveiled more specific policies, which included plans to cut the salaries of the premier and his ministers, a moratorium on hiring in the public sector this year – excluding however health services –  as well as changes to the tax system, which will now contain more tax brackets and will lead to higher earners paying more.

The Stability Programme was submitted

(GREEK NEWS AGENDA) The cabinet met yesterday  to approve the updated Stability and Growth Programme (SGP) 2008-2011, which was submitted today (15.1) to the European Commission in Brussels.

“We will achieve fiscal consolidation within three years. […] We can do it; this target is feasible,” said Prime Minister George Papandreou.
The premier added that the Stability and Growth Programme does not contain immediate fiscal adjustment measures only, but also a substantial part of the plan for the restructuring of the country.
On his part, Finance Minister George Papaconstantinou stressed that the deficit would definitely be cut, as Greece’s economy is expected to expand in the coming next years.
“The Programme was prepared with the decisive involvement of all ministries and it will be implemented through team-work,” said Papaconstantinou.
Kathimerini Daily: Cabinet stands by recovery plan; Ministry of Economy and Finance: Update of the Hellenic Stability and Growth Programme 2008-2011

Greece: New Government, New Beginning

(GREEK NEWS AGENDA)    Prime Minister Kostas Karamanlis addressed his new Cabinet following a swearing-in ceremony, emphasising that the economy and public order would top his government’s agenda. In a public speech after the first meeting of his Cabinet, Karamanlis said that tough times lie ahead for the country. “There are no easy solutions; we have an uphill struggle ahead of us as 2009 is going to be a difficult year. The global economic storm is unprecedented in post-war years,” stressing that “we are determined to succeed.” The premier outlined five priorities: boosting liquidity in the economy, protecting jobs, supporting the poor, continuing reforms that will help growth and ensuring that EU funds are used to help employment and growth in rural areas. The government is creating a new beginning, with a step towards renewal and continuity. “We don’t care about impressions, but about substantive results,” the premier said, adding that both the experience of the old and the dynamism of new members would be put to good use. The goal is to provide efficiency, stability, certainty and security to the citizens. Kathimerini daily: PM sets out priorities for new ministers & Karamanlis reshuffle a mixed bag; Greek News Agenda: Cabinet Reshuffled 

Inter-ministerial Economic Policy Committee Convenes

Prime Minister Kostas Karamanlis decided on Thursday to set up an Inter-ministerial Economic Policy Committee which will be responsible for systematic monitoring and coordination of the government’s policy in the sectors of the economy, finance and development. The committee will be headed by the premier himself and participating members include Finance and Economy Minister Yiannis Papathanasiou, Development Minister Kostis Hatzidakis and Environment, Planning and Public Works Minister George Souflias. The committee – which meets today for the first time – convenes at the Prime Minister’s Office and the Bank of Greece’s governor will be present. Relevant ministers will also be invited to the committee’s sessions in accordance with the issues being examined in future meetings.