Friday, April 30, 2010

Details Creeping Out About Austerity Part Of Aid Package

The one to the Grecian government, that is. According to a Marketwatch report, that government is expected to agree to getting its fiscal deficit to below 3% of GDP in three years.
News reports on Friday said the Greek government has agreed to implement an additional 23 billion to 24 billion euros ($31.8 billion) worth of cuts in return for the aid. The Financial Times said Greece's parliament would likely approve the plan next week....

Reports said the measures, which equal around 10% of Greek gross domestic product, are aimed at cutting Greece's budget deficit by 10 to 11 percentage points over three years from the 13.6% of gross domestic product seen in 2009.

The package would reportedly impose a three-year pay freeze on public sector workers, while also eliminating bonuses that amount to two extra months of pay, the FT reported. The package would also eliminate seasonal bonuses for pensioners and boost the average retirement age to 67 from 53....


The aid package will be much larger than was originally assumed, 'tis true, but that package is coming with IMF-level austerity measures. Later, the article passes on the current yield of 10-year Grecian sovereign debt: 9.47%. That's way above what the yield was when the Eurocrisis first broke. (Remember the tizzy when 10-years vaulted above 7%? It seems so long ago now.)

A cynic I may be, but I can't help remembering that the Grecian government also agreed to get its deficit below 3% of GDP when it first signed up for the Eurozone...

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