Tags: EU | Greece | Financial | Crisis

Greece: Deficit-Cutting Exceeds Targets So Far This Year

Thursday, 10 Jun 2010 10:39 AM

Greece has weathered the worst of its debt crisis, its prime minister declared Thursday as official data indicated the government exceeded its budget deficit-cutting targets for the first five months of 2010.

"We are on the way back to a normal financial and fiscal situation, having left the major dangers behind," Prime Minister George Papandreou said.

He insisted that Greece was no longer in danger of bankruptcy and dismissed as "a disastrous rumor mill" any talk of the country exiting the euro zone and returning to its old currency, the drachma.

"I have even heard that here are ships bringing in special paper on which to print drachmas," he said. "This is obviously risible, but it is also very dangerous as it upsets our citizens for no reason at all."

After amassing a vast public debt and overspending to the tune of 13.6 percent of gross domestic product in 2009, Greece was saved from defaulting on its loans last month by the first installment of a 110 billion euro ($131 billion) rescue package from the International Monetary Fund and the 15 other nations that share the euro currency.

In return, Papandreou's center-left government announced painful austerity measures, slashing pensions and salaries while increasing indirect taxes, seeking to bring the deficit down to 2.6 percent in 2014.

Still, a number of economists believe Greece will eventually restructure its debt despite the bailout.

Labor unions have fiercely opposed the cutbacks, arguing that less well-off Greeks will suffer disproportionately. On Thursday, state railway workers held a 24-hour strike — halting all services — to protest plans to restructure the loss-making company, cut unprofitable lines and partially privatize rail operator Trenose.

The continued flow of the European Union and International Monetary Fund bailout funds — a second batch is due in September — will depend on successful implementation of the austerity package.

Greek officials insist the effort remains well on track, with deficit-cutting targets exceeded in the first five months of 2010 as a lower-than-expected increase in revenues was offset by higher spending cuts.

A finance ministry statement Thursday said the January-May deficit was 8.97 billion euros ($10.77 billion), compared to euro14.65 billion in the first five months of 2009. It said that represents a 38.8 percent reduction, more than the planned 35.1 percent cut.

In a further encouraging sign, Greece's statistical authority said unemployment in March dipped to 11.6 percent. Although that was a five-year high for the month, the figure was down from 12.1 percent in February, with 26,500 fewer jobless people.

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Greece has weathered the worst of its debt crisis, its prime minister declared Thursday as official data indicated the government exceeded its budget deficit-cutting targets for the first five months of 2010. We are on the way back to a normal financial and fiscal...
EU,Greece,Financial,Crisis
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2010-39-10
Thursday, 10 Jun 2010 10:39 AM
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