Greece's five-year road-map for tackling debt crisis

ATHENS : Greece's parliament is being called upon this week to approve a new spate of austerity measures worth more than

Published June 26, 2011 Updated June 26, 2011 07:40am

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By Syed Murtaza Gheblehzadeh

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It includes 6.4 billion euros just this year in spending cuts on public investment and arms purchases and a reduction in bureaucracy.

The aim of the measures is to cut the public deficit by more than 21 billion euros to bring it to 1.1 percent of output by 2015 from 10.5 percent last year.

The government also intends to sell partial or full stakes in a host of state entities, aiming to raise 50 billion euros to reduce the overall Greek debt of more than 350 billion euros.

Without reforms, the Greek debt is likely to exceed 500 billion euros by 2015 according to the finance ministry.

The following are the main measures foreseen by the plan:

The sum of 1.1 billion euros will be trimmed from the government's wage and pensions bill after sweeping cuts in bonus wages for civil servants last year. Part of the savings will come from an overhaul of pensioner lists after the main social insurance organisation found hundreds of deceased claimants still being provided funds from state coffers.

Another 1.1 billion euros is to be saved from defence spending by 2015 and the government intends to cut ministry budgets by 10 to 35 percent.

The state aims to boost its income from 54 billion euros in 2010 to nearly 65 billion in 2015 through higher sales tax on various goods and services such as restaurants and a renewed effort to crack down on endemic tax evasion.

A one-off contribution is also to be levied to help fund benefits for the unemployed, which have hit record levels with more than 800,000 people out of work.

Athens has been pressured by its European Union and International Monetary Fund creditors to offload its stakes in various state entities, some more lucrative than others, to reduce its monster debt.

The plan includes the sale of stakes in the near-monopoly Hellenic Telecoms Organisation and the Public Power Corporation, the Athens airport, the ports of Piraeus and Thessaloniki, main lottery operator OPAP and several Greek banks.

There will also be long-term leases on state real estate in an effort to attract tourism investment.

The plan has whipped up a storm of protest among state unions who have pledged to resist the sale at their respective companies. Railway, port, telecoms and electricity unionists have already begun strikes.

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