• Greece admits it will not meet deficit targets this year or next

    The Greek finance ministry on Sunday (2 October) conceded that the government will not be able to meet the deficit reduction targets imposed by the European Union and the International Monetary Fund for this year or next.

    The shortfall between spending and revenues will amount to 8.5 percent of GDP in 2011, considerably wider than the 7.6 target set by international lenders.


    In 2012, the government will be able to reduce the deficit to 6.8 percent of GDP, but this figure still comes short of the 6.5 percent demanded by Brussels and Washington.

    The news comes as Athens unveiled further details on its plan to trim the public-sector wage bill by placing 30,000 workers into a so-called labour reserve pool. These workers will see their salaries slashed by 40 percent ahead of a presumed dismissal within a year.

    Officials from the EU-ECB-IMF troika accepted a plan from finance minister Evangelos Venizelos that the bulk of the workers placed in the scheme be over 60 years old and due to retire within two years, while others will come from a number of state agencies scheduled for merger or shut-down.

    The troika inspectors have returned to the Greek capital to complete their assessment of the government’s efforts to meet agreed austerity and structural adjustment targets. If the troika gives the all-clear, eurozone finance ministers and the IMF are expected to release the sixth, €8 billiion tranche of bail-out cash to the country.

    EU finance ministers are to gather in Luxembourg on Monday to discuss the eurozone crisis and specifically consider the Greek situation, but it is not expected that any decision on the release of the latest tranche of cash will be taken at the meeting.

    Resistance to the austerity measures has widened in recent days, with rolling strikes by transport workers and occupations by staff at seven government ministries. The blockades have made it difficult for the troika inspectors to meet with Greek government officials.

    Transport minister Yannis Ragoussis’ meeting with the inspectors had to be delayed and held at a secret location, according to Ana, the Greek press agency, where the minister said the government must not make concessions to those that are protesting.

    Source: EUobserver, OEIC staff