Greece to announce new austerity, unions vow strike

Wed Sep 21, 2011 12:00pm EDT
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By Renee Maltezou and Lefteris Papadimas

ATHENS (Reuters) - Greece said it will announce a plan on Wednesday to bring forward austerity measures agreed under its bailout program, mostly in the form of spending cuts, to secure a fresh injection of aid and save the country from an October bankruptcy.

But with public anger high over a belt-tightening campaign that is driving the country into a fourth year of recession, the powerful labor unions vowed to oppose the measures with two 24-hour strikes.

Financial markets are almost certain Greece will default, an event economists and politicians fear could send global markets tumbling and push other vulnerable euro zone members like Italy and Spain over the edge, potentially splitting the currency area.

But they see little chance that the so-called "troika" of advisers from the European Union and International Monetary Fund will deny Athens its next aid tranche before the euro zone strengthens its EFSF safety net designed to limit contagion.

After the troika made clear it was losing patience over the failure by Athens to meet fiscal targets laid out in its bailout program, Finance Minister Evangelos Venizelos promised in a Tuesday conference call that he would front-load the measures.

"We are doing and will do whatever it takes. We won't put the country's fate at risk," Venizelos told parliament before a cabinet meeting at which he was expected to present proposals.

The troika agreed to return to Athens early next week to continue talks on an 8 billion euro aid tranche expected in October. Earlier this month the inspectors abruptly left Greece in a row over budget slippage and corrective steps.

Greek media reported the measures likely to be brought forward included accelerated public sector layoffs, pension and wage cuts for civil servants, a hike in heating fuel tax and an extension of an already announced one-off property tax.   Continued...