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Greek PM insists govt will see through reforms

By Elena Becatoros

Associated Press

Published: Wednesday, May 25 2011 4:10 a.m. MDT

Greek Prime Minister George Papandreou, left, and opposition leader Antonis Samaras pose for a picture before holding talks about austerity measures, in Athens on Tuesday May 24, 2011. The EU is pressing Greece's Socialist government to bridge differences with the conservative opposition before eurozone countries considers granting Athens a second rescue package to cover funding needs in 2012. Papandreou on Monday chaired an emergency cabinet meeting to finalize plans for a massive privatization drive and another increase in taxes that is expected to trigger fresh protests. Greek borrowing rates shot to over 17 percent for 10-year-bonds, hitting a new record margin _ or spread _ over the benchmark German rate.

Petros Giannakouris, Associated Press

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ATHENS, Greece — Greece's prime minister insisted Wednesday his government would see through newly announced austerity measures, despite failing to secure broad support from opposition parties as called for by the European Union.

George Papandreou renewed his commitment as international debt inspectors returned to Athens to continue a crucial review of Greece's progress in meeting the terms of its €110 billion ($155 billion) bailout package from other European Union countries and the International Monetary Fund.

They will determine whether the country receives the next €12 billion installment of rescue loans in June — and could indicate whether Greece will need extra help beyond the current rescue loans.

"We have achieved very difficult targets in a critical time, and this is what we must continue. We are entering a new phase of the program with determination," Papandreou told reporters after briefing the country's president, Karolos Papoulias, on the latest developments.

The prime minister met with the heads of the political parties on Tuesday, seeking support for a midterm package of measures which will run to 2015 — two years beyond his government's mandate. But he failed to win consensus.

The new plan includes more than €6 billion in savings for this year, tax increases and pledges an immediate start to previously announced privatizations. It aims to narrow the country's budget deficit from 10.5 percent of gross domestic product last year to 7.5 percent by the end of 2011.

Top EU officials have argued that Greece, which is struggling to meet the terms of the bailout extended last year and could need more help, needs opposition parties to back the debt-cutting plans to ensure they can be implemented smoothly.

But Antonis Samaras, the head of the main opposition conservative party, said that while he agreed with several elements, including the privatizations, the overall direction of the plan, and the hike in taxes in particular, was wrong.

"To this demonstrably mistaken recipe, I will not agree," Samaras said.

Papandreou insisted the government would move forward, and was open to suggestions from the other parties.

"As I have stressed before, always the aim for me in these crucial times is for national cohesion," he said. "And I am totally open, as I have stressed to the political leaders, to every new idea, proposal that is realistic, effective ... from the parties and from every responsible body in our country, provided these proposals result in the achievement of the difficult targets our country has set."

The prime minister did not answer a question on whether he was considering holding a referendum on the austerity measures — as press reports have indicated. The head of Greece's industry federation, SEV, said late Tuesday he saw little prospect of the parties settling their differences, and urged for a referendum.

____

Derek Gatopoulos in Athens contributed.

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