Despite austerity measures Greece will still miss EU budget cut targets
Athens, Greece (AHN) – Despite drastically cutting its national budgets for 2011 and 2012, Greece will still miss the targets set by the European Union and the International Monetary Fund. Greece, which adopted the 2012 draft budget on Sunday, blamed the failure to the worsening recession.
Greece’s economy shrank by 5.5 percent this year. It is higher than the May projection of 3.8 percent negative growth rate.
Athens projects its 2011 budget deficit to reach 8.5 percent of gross domestic product, down from 10.5 percent in 2010 but still short of the 7.6 percent IMF and EU target.
The country is waiting for a report from the IMF, EU and European Central Bank inspectors in Athens if Greece would qualify for another $10.9 billion (€8 billion) bailout for the embattled government to avoid going bankrupt and entering into a default.
To qualify for the bailout, the Greek government promised to fire more public workers as part of an $8.8 billion (€6.8 billion) austerity package. Despite such drastic measures expected to incur the ire of Greek public unions, the country would still cut its budget deficit to 6.8 percent of GDP, still slightly below the 6.5 percent target set by the IMF, EU and ECB.
Notwithstanding the shortfall, the inspectors from the three international agencies agreed to the 2012 Greek budget.
Greek Prime Minister George Papandreou said important decisions needed to be taken on a European level. He told ministers that Greece needs to prove to inspectors that it is dedicated to reach the goals set.
The cost-cutting measures, however, would need parliamentary approval, which would mean another battle to win for Papandreou. Once it gains parliamentary approval, Greece will announce by December who of the 30,000 public employees will suffer pay cuts, be forced to retire early or be laid-off.
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