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Bonds News

FACTBOX-Greece's 4.8 bln euros extra austerity measures

 March 3 (Reuters) - Pressured by the EU and markets, Greece
on Wednesday announced 4.8 billion euros ($6.49 billion) in new
austerity measures to reach its aim to cut the budget deficit to
8.7 percent of GDP this year. [ID:nLDE6220NA]
The European Commission had called for additional steps to
avoid slippage from key fiscal targets, saying this was
necessary as risks related to macroeconomic and market
developments were materialising.
 NEW MEASURES
 -- Half of the 4.8 billion euros or 2.0 percent of GDP
fiscal adjustment, will be generated from spending cuts and half
from tax increases.
 -- Increase in VAT tax by two percentage points to 21
percent. Move is expected to generate additional budget revenues
of 1.3 billion euros or 0.5 percent of GDP.
 -- The government will increase excise taxes on gasoline,
cigarettes, electricity and luxury goods, expecting the move to
give revenues a 1.1 billion euro boost. The estimated additional
revenue per item is as follows: gasoline 450 million euros,
cigarettes 300 million, electricity 250 million, luxury goods
100 million euros.
 -- Further cuts in the government's wage bill are expected
to result in overall savings of about 1.7 billion euros. This
amount includes 740 million euros in savings from a 30 percent
trimming in salary bonuses for Easter, Christmas and vacation
and a 2 percent additional cut in supplementary allowances.
 It also includes 360 million euros in cuts from a 7 percent
bonus and pay reductions in utility salaries, 150 million euros
from cuts in subsidies to OTE and PPC pension funds, and 450
million from a freeze on state pensions.
 -- An additional 700 million euros in savings will come from
spending  cuts in the government's public investment programme
and education.
 -- The axe will fall on salary allowances in the public
sector affecting about 600,000 workers. Public sector
supplements will be cut by 12 percent in total, compared to 10
percent announced previously.
 -- State sector overtime pay will also be cut by 30 percent.
 -- Greece expects to earn 200 million euros from a one-off
tax on big property holdings. It will also impose a one-off tax
of 1 percent on those who earned over 100,000 euros in 2009 and
will tax church property and income.
 -- Greece's stability and growth plan projects the economy
will contract by 0.3 percent this year, but the EU Commission
sees this estimate as optimistic.
 -- Greece's 240 billion euro economy makes up about 2.5
percent of the 17-nation euro zone.
 
 GREEK STABILITY PLAN - FISCAL PROJECTIONS
                    2009    2010     2011     2012    2013
                    ---------------------------------------
Deficit (eur bln)               21.18    14.22    7.24     5.56
Deficit (% GDP)         12.7     8.7      5.6     2.8      2.0
Revenues (eur bln)             102.4    109.9   118.1    124.1
      (% GDP)                41.9     43.5    45.0     45.3
Spending (eur bln)             123.6    124.2   124.4    126.7
      (% GDP)                50.6     49.1    47.8     47.3
Fiscal adjustment (bln)         9.37     6.95    6.98     1.68
              (% GDP)        4.0      3.1     2.8      0.8
Public debt (eur bln)   272.3  294.9
Public debt (% GDP)     113.4  120.4    120.6   117.7    113.4
GDP growth (%)                  -0.3      1.5     1.9      2.5
GDP (eur bln)           240.15 244.23
------------------------------------------------------------
 source: finance ministry
 
 MEASURES ANNOUNCED PREVIOUSLY
 * PUBLIC WAGE BILL: Greece said it would extend a public
sector wage freeze to those making below 2,000 euros a month
this year.
 * A 10 percent cut in supplemental public sector salary
allowances. It also announced a hiring freeze for permanent
public sector jobs in 2010.
 * PENSIONS: Greece has said it would increase the average,
effective retirement age by two years to 63 years.
 * SOCIAL SECURITY: 10 percent reduction in social security
expenditures in 2010.
 * PRIVATISATION: Greece plans privatisation revenues of
about 2.3 percent of GDP over the next three years.
 * A one-off corporate tax is expected to produce 1 billion
euros of additional revenues. Other measures include the
reintroduction of a progressive tax on large property holdings
and the introduction of capital gains tax.
  (Reporting by George Georgiopoulos and Ingrid Melander;
editing by Stephen Nisbet)


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