Bloomberg News

Papandreou Tells EU Leaders Deficit Cuts to Pass, Official Says

June 23, 2011

June 23 (Bloomberg) -- Greek Prime Minister George Papandreou assured European Union leaders that he would deliver the budget cuts they are demanding in exchange for the next installment of emergency loans and a new rescue package, a Greek government official said.

EU leaders have made parliamentary passage next week of a 78 billion-euro ($111 billion) austerity package a condition for making an aid payment due next month and for a new financial lifeline.

Papandreou made the pledge today in Brussels at a meeting that included EU President Herman Van Rompuy, German Chancellor Angela Merkel, French President Nicolas Sarkozy and European Central Bank chief Jean-Claude Trichet. Their session preceded a summit tonight of leaders from the 27-nation EU.

The meeting also touched on a 12 billion-euro loan payment due next month for Greece under last year’s rescue. They also discussed the planned second aid package and the involvement of creditors in rolling over their holdings of Greek debt, said the official.

Measures announced by Greek Finance Minister Evangelos Venizelos to complete the budget-cut package were endorsed by officials from the EU and International Monetary Fund in Athens, said a person familiar with the matter.

A “solidarity levy” of between 1 percent and 5 percent would apply to all Greek wage earners, with members of parliament paying the top rate, Venizelos said at a news conference in Athens today. Self-employed Greeks will have to pay a separate charge estimated at around 300 euros a year on average, he said.

The levy is included in measures worth 5.5 billion euros that had still be sketched out as part of the program. Other changes include reducing the threshold for paying income tax to 8,000 euros from 12,000 euros, with people under the age of 30 exempt from the lower threshold. A small increase in heating-oil taxes will also be brought in, Venizelos said.

--Editors: James Hertling, Patrick Henry

To contact the reporters on this story: Jonathan Stearns in Brussels at Jstearns2@bloomberg.net;

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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