* “Survival of nation is red line,” Papandreou says
* Civil servants to state 4-hour work stoppage Tuesday
* Retail sales up in Feb but economists see sharp drop
By Renee Maltezou and Ingrid Melander
ATHENS, April 30 (Reuters) - Greece needs austerity measures to survive, Prime Minister George Papandreou said on Friday, rejecting calls from unions and opposition parties to resist EU/IMF demands to raise taxes and cut public sector wages.
The debt-choked country is discussing with EU and IMF officials 24 billion euros ($32 billion) worth of deficit-cutting measures to clinch a three-year, multi-billion-euro aid deal and avoid default. [nLDE63T0IC
“Today the top priority is the survival of the nation. This is the red line,” Papandreou told parliament, after calls from opposition parties not to make the harsh cuts.
“The economic measures we must take ... are necessary for our country’s protection, for our future, for us to be able to stand on our feet.”
Union officials said Greece was asked to slash its deficit by 10 percent of GDP in 2010-2011 by raising VAT tax, scrapping public sector bonuses amounting to two extra months pay, and freezing civil servants’ wages in exchange of getting the aid.
“High interest rates ... have made it impossible to borrow on international markets,” Deputy Finance Minister Philippos Sachinidis told parliament, adding the aid package would offer Greece up to 120 billion euros ($159.8 billion) for a 3-year period at reasonable interest rates.
The Socialist government, elected in October on a promise to tax the rich and help the poor, has already announced three sets of austerity measures since revealing last year that the budget deficit had shot up to more than twice previous forecasts. The public sector union ADEDY, which represents half a million workers, called on Friday for a four-hour work stoppage on Tuesday to protest against the belt-tightening, on top of a 24-hour nationwide strike already decided for Wednesday.
“We want to help the country exit the crisis, but if the government continues with these policies that hurt workers only, we have no other choice but to oppose them with all our might,” ADEDY’s general secretary Ilias Iliopoulos told Reuters.
Economists warn that the austerity measures risk further worsening recession this year, with forecasts exceeding last year’s 2.0 percent GDP decline.
Greece’s retail sales by volume rose 1.7 percent year-on-year in February after a 5.8 percent increase in January, data by the country’s statistics service showed Friday, but economists predict a sharp drop. “Consumer spending is expected to fall sharply in the coming months as sentiment is revisiting historic lows because of the high uncertainty over the short-term outlook of the economy,” said Nikos Magginas at National Bank of Greece.
Opinion polls show a majority of Greeks oppose resorting to the IMF and disagree with the sacrifices.
“I don’t think these measures will get us out of the crisis. There is no salvation for Greece,” said Vassilis Fragiskakis, 32, a glass factory owner.
Fragiskakis’ factory, which employees 35 people, has seen business go down in the last two months.
“The situation is very difficult. The reason we haven’t fired anyone is that we see these people as our family, but in the last two months we can barely make enough to pay their salaries,” he said. “It’s tragic.” (Additional reporting by Angeliki Koutantou, Harry Papachristou, Dina Kyriakidou, George Georgiopoulos and Tatiana Fragou; Writing by Ingrid Melander; Editing by Mark Heinrich)