Greece to cut spending by 12 bn euros by 2014, PM says

Greece will cut state spending by about 12 billion euros by 2014 to meet conditions under an EU-IMF debt rescue, Prime Minister Lucas Papademos told Parliament on Friday.

“In 2013-2014 a reduction in state spending of about 12 billion euros is required under the new economic program,» Papademos told lawmakers in response to parliamentary questions.

“Every effort must be made to limit wasteful spending and not to further burden salaries of civil servants,» he said.

Greece pledged in 2010 to slash its soaring public deficit in return for a first EU-IMF bailout of 110 billion euros ($146 billion).

From over 15 percent in 2009, it aims to bring the deficit to below the EU limit of three percent by 2014.

Athens drew 73 billion euros from that rescue until December before a second eurozone lifeline of 130 billion euros was set up, including some funds left over from the previous package.

Earlier this month, Papademos oversaw a major operation to cancel part of Greece’s near and mid-term debt in agreement with private creditors.

More than 94.8 billion euros’ worth of debt issued under Greek law was erased on March 12, and a second operation for debt issued under foreign law will take place next month.

The country is expected to hold early elections in May after the debt swap has been completed.

Overall, Greece will receive 185 billion euros in loans until 2015, by which point EU officials hope its economy will be strong enough to enable it to borrow from money markets at affordable rates.

But the prospect of yet another lifeline has not been ruled out altogether.

Speaking to Italian daily Il Sole 24 Ore on Friday, Papademos raised the possibility of a third bailout but said he would do everything to avoid it.

“It cannot be excluded that some financial support may be necessary, but we must try hard to avoid such an outcome,» said Papademos, who came to power last year as the head of a caretaker coalition government.

“Greece will do everything possible to make a third adjustment program unnecessary… Having said that, markets may not be accessible by Greece even if it has implemented fully all measures agreed upon,» he said. [AFP]

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