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Greek economy plan

Greece ready to start saving

RobK(Photo: Kunwar Vikram Notay & Clipart)

The Greek programme for economic recovery is ready to go, Finance Minister Ioannis Stournaras has said. Speaking on Greek TV on Tuesday, he announced that the programme will be presented to the three coalition parties for approval.

News agencies say that the savings program should yield up to 11.7 billion euros. It involves reducing state burocracy and cutting government expenditure. Cuts of civil servants' wages will amount to one billion euros, and a similar amount is expected from the reduction of salaries in state-controlled utilities such as electric power companies. In all, Greece has to find 12 billion euros over the next two years.

It's not only saving that the southern European nation envisages. The Athens government will also stimulate investment in the country by setting up special economic zones, which would offer fiscal and administrative advantages to private investors. Finance Minister Costis Hatzidakis told reporters, "We believe that these zones will boost the real economy by creating a favoroable regime to attract investements and generate exports".

Before taking effect the savings program has to be approved by an international group of inspectors from the International Monetary Fund, the European Central Bank and the European Commission, together representing the states that financed the bailout packages Greece received. The inspection will begin on 5 September in Athens. European leaders are hoping to prevent a Greek exit from the EU currency union, which they fear would trigger the collapse of the euro.

Politicians in Germany, which financed a large chunk of the earlier rescue packages for Greece, pointed out on Monday that a Greek exit from the euro group also entails geopolitical risks. "Look at the map and see where Greece is located," Michael Meister of Chancellor Merkel's Christian Democrats said. His fellow party member Laschet said, "it could lead to instability in a NATO member state". There is more at stake than the question whether Greece meets its bailout criteria, he added.

By the end of 2014 the deficit on the Greek GDP should be below 3 percent, compared to last year's 9.3, to comply with the EU stability pact for the common euro currency. Over the past five years, the Greek economy has been in recession. It has shrunk by an estimated 20 percent, partly as a result of earlier austerity measures aimed at debt and deficit reduction. - (IEDE)

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