Greece Outlines Conditions of EU-IMF Package
Acropolis hill in Athens
Kostas Tsironis/Bloomberg
A European Union flag flies at the foot of Acropolis hill in Athens last month.
A European Union flag flies at the foot of Acropolis hill in Athens last month. Photographer: Kostas Tsironis/Bloomberg
Greece outlined the conditions it accepted in return for a bailout from the European Union and International Monetary Fund of more than 100 billion euros ($133 billion). Following is a summary of a Greek-language document distributed by the Finance Ministry in Athens yesterday.
Implementation:
*Greece’s progress in achieving targets will monitored on a quarterly basis. “Normal” continuation of the financing will depend on its success in reaching the goals.
Spending Cuts:
*Reducing the so-called 13th and 14th holiday payments for civil servants and cutting bonuses by a further 8 percent to save 1.1 billion euros in 2010. Workers earning less than 3,000 euros a month will get payments of 250 euros at Easter, 250 euros in summer and 500 euros at Christmas. Employees at state- run companies will have wages cut by 3 percent.
*Reducing the 13th and 14th holiday payments to pensioners to save 1.5 billion euros in 2010. Retirees receiving less than 2,500 euros per month will get 200 euros, 200 euros and 400 euros for each period.
*Postponing the second tranche of so-called solidarity bonuses to 2.5 million poorer Greeks, a pre-election pledge, to save 400 million euros in 2010.
*Cutting public investment plan by 500 million euros this year.
Revenue Raising:
*An increase in the two main sales-tax rates to 23 percent from 21 percent and to 11 percent from 10 percent. That’s equivalent to 800 million euros in 2010 and 1 billion euros in 2011.
*Cigarette, fuel and alcohol tax increases to raise 450 million euros in 2010 and 600 million euros in 2011.
Economic Forecasts:
*Economic contraction of 4 percent this year and 2.6 percent in 2011. Growth will return in 2012 at 1.1 percent and 2.1 percent in 2013 and 2014.
*Debt will rise from 133.3 percent of GDP this year to 145.1 percent in 2011, 148.6 in 2012 and peak at 149.1 percent in 2013. It is projected to fall to 144.3 percent in 2014.
*Budget deficit will shrink to 8.1 percent this year, 7.6 percent next year, 6.5 percent in 2012, 4.9 percent in 2013 and below the 3 percent demanded by the European Union in 2014.
To contact the reporters on this story: Maria Petrakis at mpetrakis@bloomberg.net; Natalie Weeks in Athens nweeks2@bloomberg.net
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