Greece announces new budget cuts for 2011

Debt-ridden Greece yesterday announced around €2 billion in new budget cuts as demanded by the EU and the IMF in exchange for a rescue package as Germany warned a Greek “orderly default” could not be ruled out.

Greek Finance Minister Evangelos Venizelos said a €2 billion shortfall had to be covered for the country to be able to meet its obligations while unveiling a special tax on real estate.

The minister told Greek television this “new national effort” was crucial given the unfavourable perception of Greece abroad, with renewed rumours of a debt default or Greece’s possible exit from the eurozone.

Germany’s Economy Minister Philipp Roesler pointedly said, in a column to be published today, that Europe could no longer rule out an “orderly default” for Greece as it struggles with it crippling debt.

“To stabilise the euro, we must not take anything off the table in the short run,” Mr Roesler, who is also Germany’s Vice Chancellor, wrote in the column for the conservative daily Die Welt.

“That includes as a worst-case scenario an orderly default for Greece if the necessary instruments for it are available,” he said.

Eurozone leaders announced a €159-billion rescue package for Greece in July, but many Greeks fear the stringent conditions set for the money to trickle down will only make unemployment worse.

The key measure announced yesterday, the real estate tax, will vary according to the use, size and the location of the property, with “an average rate of €4 per square metre,” and will be implemented immediately, Mr Venizelos said.

The minister also announced that elected Greek officials “from the head of state to the mayors” would go without a month’s salary” and that a meeting was planned with representatives of shipowners to see how they could contribute to straightening out the country’s finances.