Papandreou buys more time, 23 bln austerity measures to be announced after Easter

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Greek Prime Minister George Papandreou said earlier today that fresh fiscal and privatisation plans would be spelled out in a few weeks, offering little to appease financial markets nervous over a possible debt restructuring.

While presenting a new package of reforms worth euro23 billion ($33 billion) through 2015, Papandreou noted that the measures were a "patriotic duty" that would bring about "radical change" in all sectors of the state. 

The measures themselves are to be unveiled after Easter, he said in opening remarks at a Cabinet meeting which was televised live. Papandreou insisted that Greece does not intend to restructure its debt, a possibility markets are increasingly fearing. 

The country's woes, he said, "will be addressed in depth. Not by restructuring the debt but when we restructure the country."

Earlier in the week, the country's finance minister said measures would not include any more across-the-board salary and pension cuts or sweeping tax increases, but would focus on curbing wasteful spending at state enterprises, limiting public sector payroll costs and cracking down on tax evasion and the nonpayment of social security contributions. "I am totally resolved to continue this effort and totally confident that it will succeed," Papandreou said, adding that "the start has been made and now we have a roadmap for the next stage."

Papandreou said the government aimed to reduce spending to 44 percent of gross domestic product by 2015 - which he said was the EU average - from the 53 percent it stood at in 2009. He expects state revenues, which stood at 38 percent of GDP in 2009, to increase to 43 percent in 2015. The levels of revenue and spending would return to those of a few years ago, when Greece's debt crisis came to the fore. "None of the targets we have set are unprecedented," he said. "What is unprecedented is the effort we are undertaking to clean up a chaotic situation and return to normality." 

Despite repeated government assurances that Greece does not intend to restructure its debt, many analysts have argued it will eventually be forced to do so, even if it follows through on all its pledges.

IMF chief Dominique Strauss-Kahn said late Thursday that the country would manage - provided it really does implement the reforms it has pledged. "It is painful, and I understand how painful it is for the Greek people," he said. "But, I think Greece will make it. To do this, we build a program. Of course, this program has to be implemented." He stressed that the government, "which was very bold in implementing a lot of measures during the last year, should not run out of steam."


Meanwhile, yesterday Central Bank Governor Mr. Provopoulos said in an interview with Dow Jones Newswires that debt restructuring is neither necessary nor desirable--as it would create more problems than the ones that it would attempt to solve.

"What is needed is for the government to continue with even bolder fiscal consolidation and structural reforms. My view, all along, has been that the government should over-achieve its targets," said Provopoulos, who also is a member of the European Central Bank governing council.