Greece plans asset sales and budget measures
Greece plans to carry out 76 billion euros in budget measures and asset sales to meet budget deficit goals. Greece will enact 26 billion euros in deficit cuts and 50 billion euros in asset sales through 2015. Hopefully these measures will cut the deficit to near 1 % of GDP by 2015 from a targeted 7.4 % this year.
Greek bond yields have soared to a record after a German official said mid week that Greece may have to renegotiate its debt burden. The extra yield investors demanded widened to 1,043.63 basis points the most since before the euro’s debut in 1999. The yield on the Greek 10-year bond rose 54 basis points to 13.82 percent.
The government will sell stakes in the country’s phone, power, gas and gambling companies and airport to raise funds to trim debt the sales aim to slash debt by 20 percentage points of GDP by 2015.
Greece will cut defense spending by 1.2 billion euros, or 0.5 % of GDP, reduce public-sector wage costs by 2 billion euros, or 0.9 % of GDP, and trim spending on pensions by 2.5 billion euros, or 1.1 % of GDP. Also a crackdown on tax evasion will yield 3.5 billion euros, or 1.5 percent of GDP.
The measures are aimed at meeting a target, agreed with the EU and the IMF as a condition for the bailout, to cut the deficit to less than 3 percent of GDP by 2014 and a self-imposed goal of reducing it to below 1 percent by 2015. The government still aims for a deficit of 7.4 percent this year even though first quarter revenue missed the target by 1.4 billion euros.
Greece’s Public Debt Service Management Agency will sell 1.25 billion euros of 13-week treasury bills on April 19, they have continued to hold regular T-bill auctions even as it remains frozen out of international bond markets.
