Greece will submit its Growth and Stability Plan to Brussels at the end of January after getting the nod from European Commission officials on an agenda it hopes will help to restore confidence in the economy, a senior Finance Ministry source said yesterday. The four-year plan is seen as being crucial to convincing investors and the European Commission that Greece is able to control its swelling budget deficit and growing public debt through a combination of spending cuts and increased tax revenues. A team of officials from the European Commission and the European Central Bank are expected in Athens tomorrow for three days during which they will take an initial look at how the proposed Stability Plan will meets its goal of reducing the budget deficit by four percentage points this year to 8.7 percent of gross domestic product. «They want to see the measures we have announced mapped out,» said the Finance Ministry source. «We won’t send a plan to Brussels until we have a green light from one of the officials. There will be no issue of this plan being rejected by the Commission.» A hike in levies on cigarettes and alcohol, aimed at raising some 500 million euros, and an overhaul of the tax system as of March aimed at helping catch tax cheats are among the measures the government will use to boost revenues. On the expenses side, civil servants earnings more than 2,000 euros per month will see their wages freeze this year, while a 10 percent cut in allowances paid in the public sector will save the government about 500 to 600 million euros. Speculation that Greece may not be able to meet its borrowing needs and could face bankruptcy has made markets nervous, pushing the premium investors demand to hold 10-year Greek government bonds rather than eurozone benchmark German Bunds to record highs in recent months. Yesterday, however, 10-year Greek bonds yielded 228 basis points over equivalent-maturity bunds, around 10 basis points less than on Thursday, helped by favorable sentiment toward riskier assets, Reuters reported. Meanwhile, the senior ministry source confirmed that the Greek government intends to raise 2.5 billion euros of privatization revenues in 2010 without providing details as to how the money is to be raised. Borrowing this month unlikely Greece may not need to resort to capital markets in January to borrow money despite the maturation of bonds later this month. «In January, bonds of around 4 billion euros will mature. We have cash reserves to cover this,» a senior Finance Ministry source said yesterday. «We may borrow a portion of this amount if we decide it is necessary.» Greece, which is reportedly expected to borrow about 54 billion euros this year, will tap capital markets for about 70 percent of this amount in the first half of 2010. «The tough months are in April and May,» the source added. The government may use different market instruments available to finance its debt during 2010, including private placements. Options also include selling debt to China, the source said. «We are looking at all markets for funds. It is obvious we would like Asian and Chinese capital to buy Greek bonds. However, press reports saying that the Chinese may buy a third of [total] debt are not true,» he added.