Greece races to push through cuts

Athens - Greece's socialist government rushed on Monday to push through parliament a fresh round of spending cuts in the face of public anger at the price of the €110bn international bailout.

Greek Prime Minister George Papandreou has insisted the austerity package was essential to secure the joint eurozone-International Monetary Fund rescue package.

But Greek unions have vowed to battle the drastic round of austerity measures, worth about €30bn and including deep cuts to wages and pensions.

Union leaders have flagged up a general strike on Wednesday as the first stage in resistance to the government's austerity programme.

The government is to present the new austerity measures to parliament late on Monday or Tuesday and aims to get a vote on Wednesday or Thursday at the latest, an official said.

Newspapers said the day after the cuts were unveiled that they marked the end of an era in Greece and the beginning of years of painful sacrifices.

"Our way of life, of working, consuming and organising our lives in this part of the Balkans is finished since yesterday," the pro-governmental Ta Nea newspaper said in an editorial.

The main headline of the independent left-leaning Eleftherotypia read "Four years without a breath".

Papandreou, in a speech to his cabinet on Sunday, made it clear the cuts would run deep. But he was clear, too, about what he believed was at stake.

"I know that with the decisions today our citizens must suffer greater sacrifices," he said. "The alternative, howeve,r would be catastrophe and greater suffering for us all."

The €110bn bailout to dig Greece out of its debt crisis is bigger than the the deal agreed to salvage bankrupt Argentina in the 1990s.

European governments endorsed the deal at a meeting of finance ministers in Brussels on Sunday, although the parliaments of some of the 16 eurozone countries involved, notably France and Germany, still need to approve it.

The first installment of the eurozone-IMF rescue package would then be paid within the next few weeks, with the rest spread over three years and conditional on the cuts and tax rises in Greece.

That should mean the first payment will be in the Greek coffers ahead of the May 19 deadline for €9bn of debt repayments.

IMF MD Dominique Strauss-Kahn said on Sunday that the fund's executive board was set to approve its part of the deal, €30bn, within the week.

"The authorities' programme is designed with fairness in mind," he said of the government's cuts. It would include more progressive taxation and a clampdown on tax evasion, with closer checks on the rich.

Athens would also exempt the most vulnerable from cuts in wages and pensions, said Strauss-Kahn. And there would be a "significant reduction" in military spending.

But Yannis Panagopoulos, president of the million-member strong GSEE union, denounced the government's plan as the "most unfair and hardest measures in the modern history of Greece".

The austerity plan would only "worsen the recession and plunge the economy into a deep coma", he warned.

"It's time to step up the social battle, our May 5 general strike will be the beginning of a long battle."

In exchange for emergency loans, Greece has agreed the new cuts over three years with the aim of slashing the public deficit to less than 3% of output by 2014, from 13.6% last year.

Finance Minister George Papaconstantinou said the government would scrap 13th and 14th month bonus wages for public sector workers and pensioners; raise the retirement age for women from 60 to 65, bringing it in line with that for men; and raise the sales tax from 21% to 23% this year.

Rocked by violent street protests at home, Greece has been under heavy pressure to cut a massive public deficit that has shaken the euro, rattled markets and sparked fears of contagion to other debt-ridden European countries.

But the euro slipped and Asian stocks tumbled in thin trading on Monday on doubts about the bailout.

The single European currency bought $1.3224 at 03:50 in Asia, down from $1.3294 late in New York on Friday, paring back early gains that saw it climb as high as $1.3332.

The European Central Bank meanwhile suspended criteria for Greek debt it accepts as collateral for loans of central bank funds, a major boost for the Greek government and banks.

The move, which is to remain in effect "until further notice", means that banks in Greece and elsewhere will be able to keep getting ECB cash loans using government bonds and other marketable debt instruments as collateral despite their ratings by international agencies.

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