Tags: greek premier | fix | economy | deficit | tame | george | Papandreou

Greek Premier: I'll Fix Economy No Matter What

Thursday, 17 Dec 2009 08:00 AM

Greece will pull its economy out of its worst crisis in decades by tackling corruption and waste regardless of the political cost, Prime Minister George Papandreou has vowed.

Papandreou has announced a raft of measures to reduce Greece's staggering 300 billion euros ($440 billion) public debt by 2012 and gradually bring the budget deficit — projected at 12.7 percent for 2009 — to below the European Union's requirement of 3 percent of a country's economic output by the end of 2013.

"We don't have an orthodox cocktail of measures," Papandreou told The Associated Press in a telephone interview Wednesday from Copenhagen, where he was attending the global climate change conference.

"But we have measures which ... don't deal simply with the symptoms, but deal with the core issues of the problem of the Greek economy and the Greek financial situation," he added.

One indication of what might follow came Thursday, when Greek journalists, hospital doctors and port workers went on strike and were planning demonstrations. But Greece's two major labor unions have not joined in the strike, which was called by a Communist-backed union before Papandreou announced the measures Monday. Services such as public transport, mail delivery and banks were not affected.

Athens, facing its worst debt crisis in decades, has come under intense European Union pressure to get a grip on the public finances. Investors have taken fright too, marking up the cost Greece has to pay when it issues debt — on Wednesday, Standard & Poor's followed its rival Fitch and downgraded its credit rating on Greece, arguing that Papandreou's plan was unlikely to lead to a "sustainable" reduction in the country's debts.

Papandreou said much of the effort would focus on fighting rampant tax evasion, corruption and public sector waste — a formula that international economists have dismissed as inadequate to tackle the tide of red ink.

These problems, the prime minister said, centered on "the way the public sector has been run." He cited "the huge amount of corruption, lack of rule of law which has created widespread tax evasion."

A quick fix would have been easier but would have risked the economy backsliding in the long term, said Papandreou, whose Socialist party returned to power in elections Oct. 4 after more than five years in opposition.

"Our goals are very specific, our numbers are very specific, and we will get there," he told AP. "We will get there no matter what it takes."

Papandreou has said he is determined to reduce the 2010 deficit to below 9 percent, to 7 percent in 2011 and to 5 percent in 2012, and reaching the European Central Bank's target of 3 percent in 2013.

Papandreou acknowledged he could face opposition, but insisted his measures had widespread public support.

He noted that his Socialist Party was elected with a mandate to reform society, including the bloated public-sector work force.

"This is not going to be easy for anyone," he said. "We are making some major changes and I expect that there will be reactions. But I also believe that we have created a strong consensus for these changes, and ... that's a strength which I think the markets should also understand."

Papandreou held a rare meeting with rival party leaders Tuesday as he tries to build up an all-party consensus for budget cuts. He said all leaders agreed on "the general thrust" of revamping Greece's public sector, tackling corruption and reforming the tax system.

But Papandreou stressed that while "there may have been a lack of credibility in the old government, we're a new government, we have a new mandate."

He said his plan for Greece's economy "is a major change in Greece."

"But that's what we want. We don't want something which is simply superficial. Because in the end the markets want to know that we're on the right path."

However, the prime minister stressed that Greece was not alone in suffering from an ailing economy.

"We're not the only country in the world that has these problems, and being singled out or being connected with problems such as Dubai is I think unjustified," he said.

Last month, the news that Dubai World, a government-owned investment company, was looking to postpone debt payments of around $59 billion, sent shock waves through the financial world — Greece was quickly identified in the markets as one potential sovereign credit risk.

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Greece will pull its economy out of its worst crisis in decades by tackling corruption and waste regardless of the political cost, Prime Minister George Papandreou has vowed. Papandreou has announced a raft of measures to reduce Greece's staggering 300 billion euros ($440...
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