GREECE will today present fresh austerity and privatisation plans in an attempt to convince markets it can tidy up its finances and avoid restructuring its debt.
“The measures which we will announce will send a message to markets: Greece now has credibility, a plan and a prospect which guarantee that we will meet our targets,” government spokesman George Petalotis said, denying debt restructuring plans.
The government is expected to announce sell-offs, benefit cuts and effective tax hikes to save about €23bn (£20bn) to bring its budget deficit to about one per cent in 2015 from about 10 per cent in 2010, officials said. Two-thirds of this would come from spending cuts and one third from revenues.
Worries that Greece will be forced to restructure its massive government debt saw Greek bond yields surge yesterday. Markets were reacting to German finance minister Wolfgang Schaeuble’s warning that “additional steps” may have to be taken if research suggests that Greek debt is not sustainable.
The yield on two-year Greek bonds hit 18.4 per cent, while five-year yields briefly topped 18 per cent and 10 year yields rose to a euro lifetime high of 13.61 per cent.
Greece “needs more time” to convince investors that its reform programme is on track, finance minister George Papaconstantinou also said.
It is unclear when Greece will be able to return to the financial markets for funding, Papaconstantinou admitted.
A review of the Greek position is due to be published in June, written by the European Central Bank (ECB) and European Commission.
Senior ECB official Olli Rehn hit back yesterday, insisting: “We do not see debt restructuring as an option. Instead we are engaged in a revised and updated debt sustainability analysis, which we will do with the IMF and present in due course,” Rehn said.