4.8 BILLION EUROS: Greece announces further spending cuts

Greek Prime Minister, George Papandreou, yesterday announced that the Greek government approved a cut in public spending by an additional 4.8 billion Euros (6.6 billion dollars), in an attempt to convince European officials and investors it can solve its deficit issue.

Half of the new austerity package includes various cuts in public spending, while other measures include raising budget revenues by raising tobacco and alcohol excises, as well as raising VAT (21% from 19%). Furthermore, the Greek government will also cut 30% of the three holiday bonuses of civil servants (Christmas, Easter and leave).

George Papandreou said that the decision concerning the new austerity package was difficult to make, but it was necessary for the "survival of the country and of its economy".

The measures announced yesterday are part of the second package announced by Greece since January 15th, when it presented its initial plan to the European Commission. Greece committed to cut its budget deficit by 4% this year, to 8.7% of the GDP. In 2009, Greece had the largest budget deficit in the European Union: 12.7% of the GDP.

• Further protests

Following the announcement, unionists in the public sector announced that they would launch a new protest today in Athens. On March 16th, the unionists will hold a new 24 hour strike.

Yesterday, Greek pensioners marched before the headquarters of the Ministry of Finance in the capital of Greece, protesting the planned pension cuts.

After the new austerity package was announced, the Euro appreciated to 1.3623 against the dollar, from 1.3615, prior to the announcement.