ATHENS, Greece — Facing a dire choice of additional pain or bankruptcy, Greece on Friday heralded drastic new cuts and tax increases to win rescue loans from its European partners and the International Monetary Fund — and avoid a disastrous default on government debt.
Prime Minister George Papandreou said cuts are inevitable if the country is to stay afloat.
“The measures we must take, which are economic measures, are necessary for the protection of our country. For our survival, for our future. So we can stand firmly on our feet,” Papandreou said in parliament.
Greece, the EU and the IMF are expected to complete talks this weekend over what extra steps Athens must take as a condition of the rescue, which would provide about $60 billion in loans this year and reportedly up to nearly $160 billion over three years.
Papandreou is widely expected to detail the cuts on Sunday, the day after a mass protest rally planned by the country’s biggest labor unions to mark May Day. Officials briefed on the negotiations say the measures will include a further slash in civil service pay as well as state and private sector pensions, and a new hike in indirect taxes, including a 2 percentage point increase in sales tax.
“It is a patriotic duty to undertake this, with whatever political cost, which is tiny faced with the national cost of inaction . . . and indecision,” Papandreou said.
Luxembourg’s Jean-Claude Juncker, the head of the Eurozone finance ministers, called a meeting of the 16 eurozone finance ministers in Brussels Sunday afternoon to review the rescue.
