Dimitris Yannopoulos

 

BARELY a couple of hours after winning the consent of conservative opposition party leaders to forge ahead with “painful but necessary fiscal reforms”, Prime Minister George Papandreou announced on February 2 a tougher array of measures to boost fiscal revenue and cut expenses.

 

The new austerity package included a hike on fuel consumption taxes as well as public sector wage and hiring freezes this year. 

 

In his televised address to the nation, a sombre Papandreou did not hesitate to blame “the unprecedented crisis we are experiencing” on the fact that Greece finds itself targeted in a wider speculative attack on the common European currency. 

 

“Our national duty is to ward off these efforts to push the country over the cliff,” Papandreou said.

 

 

“Today Greece is in the centre of a broader international profiteering game, with the euro as its target,” the premier added. “Unfortunately, because of our country’s past policies, we are seen as the eurozone’s weak link. It is a national duty to fight those forces that have tried to push our country to the edge.”

 

Speaking on the eve of the European Commission approving the Greek Stability and Growth Programme (SGP), Papandreou sought to justify the urgency in the implementation of tough fiscal measures.

 

“The terms of borrowing are getting tougher by the day and threaten to strangle the economy,” Papandreou said.

“This makes the adoption of immediate measures a matter of urgency,” he added following face-to-face talks with the leaders of all parliamentary opposition parties. 

 

 

In this context the PM announced the main thrust of a wide-ranging tax reform which includes an immediate increase in the excise tax on petrol which had not been included in either the measures enshrined in the 2010 budget or the earlier version of the SGP plan. 

 

He outlined a host of measures to control public sector expenditures, including a generalised freeze on basic public sector wages and new hirings. In the past, both measures were qualified by excluding wages below 2,000 euros from the pay freeze, and the ministries of health and education from the freeze in new hirings.

 

Similarly he announced an “average” 10-percent reduction in civil servant wage supplements, which implied that some cuts may exceed the 10 percent limit. 

 

Papandreou referred to initiatives aimed at restoring Greece’s faltering international competitiveness and asked both employers and employees to contribute in this direction. 

 

Finally, he referred to the government’s intention to move fast with social security reform, including an increase in the retirement age. The latter was one of the measures vehemently denied by the minister of labour and social security, Andreas Loverdos, who preferred a levy of a new special tax as a means to rescue the heavily indebted pension funds. 

 

“We cannot today afford to give handouts or bow to special interests,” Papandreou said. “We cannot as a nation afford blockades and strikes. Let’s work together towards big changes and adjustments.”