EU IMF & Greece | New austerity plan for €110bn

Europe and the IMF agreed to €110 Billion financing plan with Greece. Mr. Dominique Strauss-Kahn, Managing Director of the IMF issued the following on Greece:

"The Greek government has designed an ambitious policy package to address the economic crisis facing the nation. It is a multi-year program which begins with substantial up-front efforts to correct Greece's grave fiscal imbalances, make the economy more competitive and—over time—restore growth and jobs. We believe these efforts, along with the government’s firm commitment to implement them, will get the economy back on track and restore market confidence."

Please refer to a previous Blog post, on my take on the issue "The Greek financial sodoku".

The implementation of the new financial measures include:

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.

Bellow you can watch Poul Thomsen, IMF mission chief for Greece. The IMF & EU believe that while difficult, the steps being taken by the Greek government are necessary to restore confidence in the Greek economy and to secure a better future for the Greek people.

To quote my post "Short Selling the Greek Euro (3 March 2010)" Greece will face even more reactions to the austerity measures, not from the Europeans, or the International financial community, but from the Greek people; scenes like these from a recent rally in the streets of Athens will become a daily occurrence.