NEWS

Papandreou raises alarm over economy

In his first address to Parliament as prime minister, George Papandreou yesterday set out his government’s aims for the next four years but stressed that the poor state of the economy means that PASOK will have to take some tough measures. Papandreou presented his government’s policy program ahead of a three-day debate in Parliament. The issue of the economy dominated the agenda. «Today we face an unprecedented fiscal derailment,» he said. «The deficit must be cut and we must start containing the public debt.» Earlier, Finance Minister Giorgos Papconstantinou had told Reuters that the budget deficit would exceed 10 percent of GDP this year, well above the 3 percent limit for eurozone members. «This is the toughest moment since 1993 when another New Democracy government had handed over the country in recession and with a large debt and deficit,» said Papandreou. «We are in an emergency situation, everyone must understand that,» said the premier. «There will need to be spending cuts at every ministry.» Papandreou said that it was also his government’s intention to restore the faith of the European Union and its member states in the Greek economy. However, the prime minister did not go into great detail about cutbacks, instead focusing on the money that the government will spend. This includes handouts for low-income households, higher pensions for farmers and public sector pay raises. Papandreou said that his government would cut bureaucracy to spur entrepreneurship and would change the tax system within the next three months. The new scheme would be a progressive, inflation-indexed system. New taxes will be introduced for Orthodox Church of Greece property as well as property owned by offshore companies. Papandreou also emphasized the positions his government has taken since coming to power on a range of other issues, including transparency, health, education and foreign policy. The current new democracy leader, Costas Karamanlis, is due to speak in Parliament this afternoon. The debate over PASOK’s proposals is due to continue until Sunday night, when a vote of confidence in the government will be held.