Prime minister George Papandreou today reiterated that Greece won't need to restructure its debt as he opened a Cabinet meeting to present measures aimed at achieving deficit-reduction goals.
The government's medium-term fiscal policy plan will detail more than €22 billion of deficit-trimming measures through 2015, most of them in spending cuts, according to finance minister George Papaconstantinou.
The government is also expected to unveil plans to raise €15 billion by 2013 through state-asset sales.
"Greece's problems won't be solved by restructuring its debt but by restructuring the country," Mr Papandreou said at a cabinet meeting today in Athens in comments broadcast live by state-run Net TV. "Even if with the wave of a wand the debt disappeared, Greece in a few years would have debts again without these reforms."
Greece plans to gradually reduce its stake in Athens International airport from next year as part of its state asset sale plans, according to an e-mailed statement from the Greek prime minister's office today. The country also plans to reduce its stake in Public Power Corp to 34 per cent from 51 per cent in 2012, according to the statement.
Greece came close to defaulting on its debt last year, requiring a €110 billion bailout from the EU and IMF, after it emerged that the country had underreported the size of a budget deficit that reached 15.4 per cent of gross domestic product in 2009. The extra yield investors demand to hold 10-year Greek debt instead of benchmark German bunds widened 37 basis points to a record yesterday after German finance minister Wolfgang Schaeuble said Greece may have to renegotiate its debt burden.
The spread rose 1 basis point to a new high of 986 basis points as of 11.51 a.m. in Athens.
The measures are aimed at meeting a target, agreed with the EU and IMF as a condition for the bailout, to cut the deficit to less than 3 per cent of GDP by 2014 and a self-imposed goal of cutting the shortfall below 1 per cent by 2015.
The government is still aiming for a deficit of 7.4 per cent of GDP this year, even as first-quarter revenue missed the target by €1.4 billion.
Greece will cut spending to 44 per cent of GDP in 2015 from 53 per cent in 2009, Mr Papandreou said today. The plan will boost revenue to 43 per cent of GDP in 2015 from 38 percent in 2009.
Details of the government's proposals will be fleshed out before being presented to parliament next month, Mr Papandreou said. The plan "is not just to tackle economic problems but also social and political problems," he said.
Bloomberg
