ECONOMY

Work starts on backup to budget

A day after European Union finance ministers applied pressure on Greece to take additional budgetary measures, the government started to put together a 2.5-billion-euro plan aimed at easing concerns over its debt crisis. Sources said yesterday the Finance Ministry is looking into further steps that will reduce the deficit by 1 percent of gross domestic product (GDP), amounting to about 2.5 billion euros, in order to help it to meet this year’s budget goals. Greece has announced a plan to lower its deficit by 4 percent in 2010 via a higher fuel tax, cuts in public sector pay and pension reforms but the markets and its EU peers believe that more is needed. «The pressure to take extra steps is immense,» said a government source. «[EU peers] have reached the point where they have asked for jobs to be cut in the public sector wherever positions are not protected by permanent employment status,» the source said. On Tuesday, EU finance ministers in Brussels gave Greece until March 16 to show whether its plan is being rolled out effectively and to decide whether further steps should be taken. Finance ministers from Germany, Austria and Sweden publicly announced that more is needed from the Mediterranean country, such as slashing spending and wages heavily. However, it seems that the Greek government is leaning toward the option of upping taxes in a recessionary economic environment rather than tackling one of the economy’s biggest problems, a massive and inefficient public sector. Among the likely measures being examined is further upping a fuel levy and increasing value-added tax, the source added. Jean-Claude Juncker, the Eurogroup president and prime minister of Luxembourg, said earlier this week that any new measures Greece takes will be discussed with European Commissioner for Economic and Monetary Affairs Oli Rehn and his staff.