Greece’s latest massive spending cuts have been praised by Brussels, but rejected by the country’s main opposition party and the unions -who plan strikes next month.
During a seven hour long session on Monday, Prime Minister George Papandreou and his cabinet agreed an additional six billion euros worth of cuts and a speed up of privatisations to raise as much as 50 billion euros.
Union reaction was blunt, Ilias Iliopoulos, the head of the public sector employees union ADEDY, said: “The country will explode if they continue with this policy including all these measures against the people. There will be public resistance, a reaction with an uncontrollable outcome.”
Greece’s main political opposition – the New Democracy party – also rejected the government’s latest measures warning they would do little to close the country’s budget gap and would actually deepen the recession.
“The government is burdening the economy with new taxes. This brings more recession, not smaller deficits,” said conservative opposition leader Antonis Samaras after a meeting with Papandreou.
“I am not going to agree to this recipe which has been proven wrong,” he said, adding that his party favoured privatisations but not rushing to sell-offs in a state of panic.
Over the next four years, the government plans to sell off stakes in Greece’s post office savings bank, the national telecommunications company and the country’s two biggest port operators as well as string of other utilities including water, gas and power providers, plus the state railways, a bank and betting offices.
It is all part of Athens effort to convince lenders it can raise the money to pay off its debt without a restructuring – that is delayed or even reduced repayments.
Rating agency Moody’s has warned that even a voluntary debt restructuring would have serious repercussions, not just for Greece but for other stressed sovereigns in the euro zone, which could be downgraded to junk status.
Reiterating the European Central Bank’s firm objection to such policy options, France’s central banker Christian Noyer said a Greek debt restructuring would be a “horror scenario” that would be tantamount to default, shutting Greece out of debt markets and derailing a recovery.