Greece bites the bullet in bid to secure vital bailout
Published 29/02/2012 | 05:00
GREECE'S government yesterday rushed to push through legislation detailing tough pension and salary cuts needed to secure access to the country's second international package of bailout loans.
Lawmakers were due to vote late last night on public sector pension cuts and other savings measures aimed at bringing the budget back in line with targets. Ministers, meanwhile, decided to apply labour reforms, such as cuts to the minimum wage, retroactively to February 14.
Parliament must push through the final bills before the country can receive any funds from its new €130bn package of rescue loans from other eurozone countries and the IMF.
The bailout, and accompanying bond swap deal with private creditors, are meant to save the country from a potentially catastrophic default that could drag down other financially vulnerable countries and threaten the European Union's joint currency, the euro.
The rescue package is Greece's second in less than two years. The country has been surviving since May 2010 on funds from a first bailout from the eurozone and IMF, and has received €73bn from the initially approved €110bn package.
Nobel-prize winning economist Paul Krugman said Greece is "close" to having no option but to quit the euro as austerity measures imposed on the nation hamper its economic recovery. "If I were running a peripheral country, I would say that you cannot leave" the 17-nation currency region, Krugman, a professor at Princeton University, said in Lisbon.
While it would be "extremely disruptive", Greece is "very close to running out of alternatives", he said.
Meanwhile, Chancellor Angela Merkel's government is taking credit for quashing debate about joint euro-area bonds as part of its drive to make countries reduce debt, said Peter Altmaier, a senior coalition lawmaker.
"We have shoved the debate on euro bonds where it belongs now and for the foreseeable future: into the broom closet," Mr Altmaier, the parliamentary whip for Merkel's Christian Democratic Union, told reporters in Berlin yesterday.
"Step by step in the recent weeks and months, we have built up a majority across Europe for the convictions held by the chancellor and the coalition," MR Altmaier said.
Common bonds as a way to stem Europe's debt crisis and preserve the 17-nation monetary union have support from southern nations including Greece and Italy as well as Luxembourg and Belgium.
Ms Merkel opposes euro bonds, saying they would paper over differences in competitiveness in the euro area and ease pressure for budget cuts in the most-indebted nations.
German consumer confidence continues to edge higher as a healthy job market boosts hopes of higher incomes, a survey showed yesterday.
The GfK research institute said yesterday that its forward-looking confidence indicator was up to 6 points for March from 5.9 in February -- continuing its gradual upward creep of recent months. (AP)