Athens: Greece`s Prime Minister announced a barrage of spending cuts Monday, promising to control a ballooning government budget deficit and warning that the country risked drowning in debt.
George Papandreou called for unity during a speech to business and union leaders in Athens. He pledged that his new Socialist government, elected in October, would take steps over the next few months that are decades overdue.
"Greece, with so much potential, is in critical condition," he said.
The raft of measures included a reduction in defense spending in 2011 and 2012; slashing bonuses across the public sector; reducing social security and government operating expenditure by 10 percent each, and salary caps for public utility directors.
He also called for taxes of up to 90 percent on large bonuses for private bankers; the closure of a third of Greece`s tourist offices abroad, and eliminating cost-of-living increases for public sector workers with salaries of more than euro2,000 ($3,000).
Other measures include the introduction of capital gains tax and the resumption of inheritance and property taxes abolished by the previous government.
Many measures would be painful, the prime minister acknowledged, but he promised that the weaker sections of society would be protected.
Greece has been facing its worst debt crisis in decades amid global recession. It faces political pressure from the European Union to straighten out its finances and obey deficit limits intended to support the shared euro currency.
"Greece faces the risk of sinking under its debt," Papandreou said, adding that the country "has lost every trace of credibility" and that financial markets want to see action.
"Our slogan of `Either we change or we sink` is more pertinent than ever," he stressed.
Greece is not the only country in the eurozone facing debt problems. Ireland, Spain and Portugal all are suffering from extra scrutiny in bond markets.
PTI
