Greece promises to do more for its bailout cash

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Greece promises to do more for its bailout cash

Greece promises to do more for its bailout cash
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Desperate to avoid immediate bankruptcy and to get its next instalment of aid money from Europe and the International Monetary Fund, Greece is to speed up the spending cuts agreed for its bailout programme.

Government spokesman Ilias Mossialos said an agreement by the cabinet to front-load austerity measures under the deal would allow Athens to comply with the terms of its bailout through to 2014.

The measures include lowering the tax threshold to income of 5,000 euros a year from the current 8,000 euros.

Pensions of more than 1,200 euros a month will be cut by 20 percent and there will further reductions of pension payments for former state workers who have retired before the age of 55.

The government will also extend a new property tax hike until at least 2014. It was originally due to expire next year.

A total of 30,000 civil servants will be put on what is known as “labour reserve” this year. That means their pay will be reduced by 40 percent and they will be given 12 months to find new work in the state sector or lose their jobs.

The spokesman said Greece will wrap up the review of the bailout deal once inspectors from the European Union and International Monetary Fund return to Athens for talks next week.

Earlier Greek Finance Minister Evangelos Venizelos said: “The country cannot go forward without true implementation of major structural reforms. We have delayed them. We have delayed them and we must finish things and close the file on them.”

The problems is the cuts are pushing Greece deeper into recession. The economy is forecast to shrink by five percent this year, layoffs mean the number of jobless is 16.5 percent of the workforce – with youth unemployment to 40 percent. Athens owes nearly 158 percent of its economic output.

The queues at job centres are due to get longer as Greece is plans to cut the public workforce of 725,000 by a fifth in the next four years.

With the economy in tatters, Greece’s options for raising money are limited and the European Union and International Monetary Fund will have to gamble that Athens really will follow through on its promises this time.

If it does not get the next instalment of rescue cash, Greece will run out of money next month.