Greece's government plans to reduce the costs to cut the budget deficit of 6.8 billion

Greece's government plans to cut the budget deficit of 5 million euros (6.8 billion) in 2011 by reducing costs, including wages in state enterprises, and increased sales taxes to meet the objectives under a bailout led by the European Union.

The deficit was reduced to 7.4 percent of GDP or 17 billion euros, 9.4 percent of GDP this year, according to an emailed statement from its headquarters in Athens, now the Ministry of Finance. That compares with a target of 7.6 percent under the May agreement with the EU and the International Monetary Fund to secure € 110 000 000 000 in emergency loans.

"The 2011 budget should contribute to absolute adherence to the policy and allow unimpeded continuation of payment" loans, Finance Minister George Papaconstantinou told reporters in Athens today. "We all know the economy is at a critical turning point."

the efforts of Prime Minister George Papandreou to reduce the deficit are hampered because growth is slowing and earnings after the EU raised its estimate for the country's deficit in 2009 to 15.4 percent, the largest in history euro. Greece lifted its deficit forecast calls through the European officials to do more to achieve the objectives agreed in the plan of EU-led rescue that saved him by default.

Repeated revisions

A month ago, predicted that Greece's budget deficit reduced to 7 percent of GDP next year from 7.8 percent estimated that the review of the EU. The economy is forecast to shrink 4.2 percent this year and 3 percent in 2011, the contractions more than expected in May.

repeated revisions of the budget figures for Greece, Papandreou starting after last year revealed that the gap was twice the previous forecast, spurred an increase in costs that pushed the country to the brink of failure and led to a crisis debt in the region. The premium investors demand to hold Greek bond yields 10 years of similar maturity German bonds fell 15 basis points to 888 today, down from a peak of 973.1 in May.

The budget plan includes 14 million euros of spending cuts and revenue measures, more content in the project launched in October. These efforts include cuts in spending and military health care, saving "interventions" in state enterprises and to combat tax evasion and collecting back taxes. An amnesty came out last month has so far raised € 300 000 000 and will run until the end of the month, said Papaconstantinou.

Public sector wages

He said efforts will focus on reducing the wage bill in public enterprises, including public transport operation, where wages often exceed income. The plan will save € 800 000 000 and avoid the need to lay off workers, he said.

It is "not possible that wages in these companies that are 40 percent more than the rest of the public sector and double the private sector," said the minister.

ADEDY, the largest public sector union, said it will stage a 24-hour nationwide strike on December 15 to protest the measures, and join a strike called by the General Confederation of Labor, or GSEE, the largest Greece's private industry union. ADEDY also carry out a three-hour strike on 25 November, Despina Spanou spokesman said by telephone.

The government also pledged to take steps to get more out of the assets controlled by the state as the extension of the duration of the contract for the Athens international airport.

The government will increase the lowest rate of sales tax to 13 percent from 11 percent, still a tax on profitable companies freeze pensions and to achieve the objectives of 2011. To drive growth, Greece reduced the tax on undistributed corporate profits to 20 percent from 24 percent, and the tourism sector to key a cut in value added tax, reduction of the rate of 11 percent 6.5 percent.

Greece has decreased in pensions and wages to compensate for a delay in the growth of tax revenue that hinder efforts to reduce the deficit.