Athens braces for Rehn visit

European Union Monetary Affairs Commissioner Olli Rehn, in Athens today for crucial talks with government officials about the country’s spiraling budget deficit, is expected to press authorities into pushing through additional austerity measures aimed at raising an extra 3.5 billion euros in exchange for some form of emergency aid from the EU. Media speculation about the exact nature of the additional measures being sought by Brussels peaked over the weekend as government officials have not confirmed, nor denied, rumors regarding additional tax hikes and wage cuts. It is believed that the new raft of measures being prepared by the government includes a 2 percent increase to value-added tax, a further hike in fuel tax and a new tax on luxury goods. There is also fierce speculation about the abolition of the so-called 14th salary or «gift» – one of two additional salaries paid to public sector workers and to many in the private sector. These measures, expected to raise an additional 3.5 billion euros, would come on top of the tax hikes, wage freezes and cuts to supplementary income already heralded by the government over the past month and intended to raise 5 billion euros in much-needed state funding. It is thought that Rehn will push for these new cuts during talks today with Prime Minister George Papandreou, Finance Minister Giorgos Papaconstantinou and Bank of Greece Governor Giorgos Provopoulos. Reacting over the weekend to Friday’s calls for «harsh measures» by Papandreou, unionists and left-wing party leaders called on workers to prepare for further strikes. Yiannis Panagopoulos, the leader of the General Confederation of Greek Labor (GSEE), described the rumored abolition of the 14th salary as «a cause for war» for workers. But as GSEE and the civil servants’ union threaten further strike action next month, European pressure on Greece is mounting. «Greece must step up efforts to limit its public deficit… it must focus on further spending cuts and ways to increase revenue,» Luxembourg Prime Minister Jean-Claude Juncker, who leads the group of eurozone finance ministers, told Eleftherotypia in comments published on Saturday. «Greece must understand that taxpayers in Germany, Belgium or Luxembourg are not prepared to correct Greek fiscal policy mistakes,» he said.

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