April 17, 2013 in Business

Struggling Greece sticks with austerity plan

 

ATHENS, Greece – Greece promised Tuesday to stick with tough austerity measures, holding out hope for a debt-relief deal with emergency creditors, but its prime minister conceded that the tax collection system was in need of major reform after it “essentially collapsed.”

“No, we have not overcome the crisis yet, but light is beginning to appear at the end of the tunnel,” Prime Minister Antonis Samaras told a business conference late Tuesday. “No one is betting on a Greek exit from the euro anymore.”

He spoke the day after Greece struck a deal with rescue creditors expected to secure it $11.55 billion in further loan payouts. The agreement followed weeks of tough negotiations and will include 15,000 public-sector layoffs.

In its sixth year of recession, Greece is struggling to achieve a primary budget surplus – which excludes the cost of servicing the huge public debt – in 2013, with hopes of winning further debt relief from its creditors.

Samaras also promised to bring down taxes after balancing the budget, but acknowledged difficulties in repairing the government revenue mechanism, which had failed to hold large numbers of Greeks accountable for paying their taxes.

“It is necessary to change our tax system because it had essentially collapsed in a frenzy of unprecedented tax evasion,” he said.

Greece has been locked out of international bond markets since its economy imploded in 2010, and many feared the country would have to leave the group of countries that use the euro currency. The Greek economy has since been kept afloat by rescue loans from European partners and the International Monetary Fund, in exchange for harsh austerity measures that have fed the recession.

“We still face a hard road ahead, until Greece can access markets again,” Finance Minister Yannis Stournaras said earlier Tuesday.


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