Greece to start austerity drive as nation seethes | world | Hindustan Times
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Greece to start austerity drive as nation seethes

Greek Prime Minister George Papandreou started a campaign on Monday to secure a new international bailout by imposing years of austerity on a nation already seething over corruption and economic mismanagement.

world Updated: Jun 06, 2011 22:13 IST

Greek Prime Minister George Papandreou started a campaign on Monday to secure a new international bailout by imposing years of austerity on a nation already seething over corruption and economic mismanagement.

Unease is growing within Papandreou’s ranks about the consequences of waves of budget cuts demanded under successive deals with the European Union (EU) and International Monetary Fund (IMF) — and this could turn into alarm after at least 80,000 Greeks crammed a central Athens square to vent their anger over the dire state.

As the government struggles to prevent Greece from defaulting on its debt, the socialist cabinet began discussing the medium-term economic plan which will impose €6.4 billion of extra savings this year alone.

This is the first stage of a drive to turn the plan, agreed on Friday with the EU and IMF as the price of a new financial rescue, into law despite signs of dissent in the ruling party.

Papandreou will present the plan to the political council of his PASOK party on Tuesday, before the cabinet clears it the following day and sends it to parliament.

Greece’s international lenders say the new bailout package, which would replace a €110 billion deal agreed only a year ago, depends on Athens keeping to its promises for further austerity and accelerated privatisations.

Meanwhile, Germany has indicated that it is not fully committed to another round of bailouts for Greece.

Government spokesman Steffen Seibert said in Berlin: “What is out there now are not commitments but opinions,” referring to a mooted ¤60 billion second package.

“German payments must be decided by German authorities,” Seibert stressed.

Germany's Deutsche Telekom said it would buy an extra 10% of Greece’s OTE telecom company from the state for about €400 million, taking its stake to 40%. However, this did not amount to a new privatisation as the sale was made under a deal struck in 2008.

Under Greece’s austerity policies, unemployment has already hit 15.9% of the workforce and the medium-term plan aims for a further €22 billion euros in budget steps in 2012-15.

Greece’s first €110 billion-euro, bailout assumed that it could resume borrowing commercially early next year. This now appears inconceivable, meaning a new package is vital.