Greece could seek IMF aid

GREEK Prime Minister George Papandreou warned yesterday he would turn to the International Monetary Fund for support should the EU not provide the financial assistance he wants.

The threat came in the wake of fresh spending cuts – the country’s toughest in decades.

The newest line of measures are expected to raise €4.8bn (£4.3bn) after the Greek government said it will reduce civil servant annual bonuses by 30 per cent, increase VAT by two per cent to 21 per cent and place a freeze on state pensions.

Higher taxes on alcohol, tobacco, luxury cars and yachts will also be imposed.

Greek Prime Minister George Papandreou said the country actions will have to wait for approval from the EU, and he will meet German chancellor Angela Merkel in Berlin on Friday. He will also meet President Nicolas Sarkozy on Sunday in Paris.

The new austerity package however already helped to ease fears in European markets that Greece will not be able to refinance its €20bn (£18bn) debt pile, which matures by May of this year.

News of the plan to make heavy cuts was met by more protests in Greek cities yesterday.