Greece will not have to pass any new austerity measures in 2012 if reforms that have already been approved are put in place, finance minister Evangelos Venizelos said today.
"We won't need to take any more measures that reduce citizens' incomes as long as we implement what we have already approved and which is already difficult," Mr Venizelos told reporters after submitting next year's final budget draft to parliament.
Under the guidance of its international bailout lenders, the European Union and the International Monetary Fund, Athens is struggling to rein in its public debt and fiscal deficit to avoid bankruptcy and a possible exit from the euro.
Part of that effort is a plan to cut Greece's privately held debt load in half, which the budget draft said would entail swapping €200 billion in existing bonds with €70 billion in new paper and a €30 billion payment in cash to creditors who take part.
Excluding the effects of the debt swap, the budget draft predicted the country's fiscal gap would fall to 6.7 per cent of gross domestic product next year, down from 9 per cent in 2011.
"After a historical course of steady increase of public debt, now this will be reversed," Mr Venizelos told parliament as he presented the draft budget.
"Now the course is that of reducing public debt and removing the burden from Greeks' backs."
Politicians will begin debating the budget draft at committee level next week and will then be approved by a plenary session of parliament at a date yet to be set.
Parliament approved a new national unity government led by technocrat prime minister Lucas Papademos in a vote of confidence two days ago. Mr Venizelos kept the portfolio he had held in the previous Socialist administration.
The new cabinet is aiming for a primary budget surplus - with revenues exceeding spending when debt maintenance costs are excluded - next year so it can start chipping away at its debt load which, without the swap deal, is estimated to reach almost 200 per cent of gross domestic product next year.
To do that, Mr Papademos's government must tackle rampant tax evasion, start selling off billions of euros worth of inefficient public companies and lay off public workers - all reforms planned but never executed by its Socialist predecessor.
The budget also forecast that a recession expected to enter a fifth year in 2012 would slow to an economic contraction of 2.8 per cent, versus an expected 5.5 per cent this year.
The "troika" representatives from the European Union, the International Monetary Fund and the European Union will meet prime minister Lucas Papademos and political party leaders for talks today and tomorrow.
Reuters
